Iran seals deal with Boeing to buy 80 planes worth $16.6B

Posted December 13, 2016

According to Boeing, the agreement has a total worth of $16.6bn at current list prices and had been approved by the U.S. government.

Boeing co. (NYSE: BA) signed an agreement to sale 80 passenger jets worth $16.6 billion to Iran Air.

The two deals follow an intense final flurry of negotiations between Iran and Western planemakers in an effort to formalise provisional contracts announced earlier this year, which face mounting political criticism in both Washington and Tehran. They include 50 of a new version of its single-aisle 737 jet, 15 of its larger 777s and 15 of a new 777X that should be ready for service by 2020. Iran Air, whose website lists a fleet of 43 planes, offers direct flights to over 30 global destinations, including London.

However, there is huge political opposition in the U.S.to doing business with Iran.

President-elect Donald Trump had threatened to reverse any trade agreements relating to Iran.

In 2011 the U.S. Treasury Department sanctioned Iran Air for allowing its planes to be used to transfer supplies and weapons to Syria's Assad regime and other beneficiaries of the Islamic Revolutionary Guards Corps (IRGC). For example, the USA continues to block companies from doing business with Iran in US dollars.

The total value of the deal is $16.6 billion - by far the biggest between US and Iranian businesses since the 1979 revolution, which shut off normalized relations between the countries.

"Today's agreement will support tens of thousands of USA jobs directly associated with production and delivery of the 777-300ERs and almost 100,000 U.S. jobs in the United States aerospace value stream for the full course of deliveries", the company said in a statement. The bill would next need to pass the Senate, which, although Republican controlled, failed to pass an earlier bill this summer that would have blocked sales of commercial aircraft with a certain amount of US content. Airbus has a similar deal for jet sales to Iran pending. "Iran has kept flying those same planes for decades and its fleet of aging, worn-out commercial aircraft is in desperate need of replacement". Okay, it's a very important and necessary move.

Financial sources said Boeing has a financing plan for 15 777-300ER jets, which are expected to be delivered from 2018, but the rest of the financing may still have to be negotiated.