Fresh skepticism springs up about the fate of a deal which Boeing has signed to provide Iran Air with over 80 jetliners after the US aircraft maker says none will be delivered this year.
Since Boeing announced a tentative deal to sell jetliners to Iran in June, US lawmakers have been trying to block it. Under the agreement, Boeing must supply Iran some 80 passenger jets worth $25 billion at price lists.
On Tuesday, Boeing Chief Executive Officer Dennis Muilenburg said while the two sides were making progress on the deal, no deliveries would take place this year.
“We won’t deliver any aircraft under that deal this year – these are deliveries that are a year, two, three downstream,” Muilenburg told reporters on the sidelines of a conference in Chicago on future technologies.
Boeing’s deal is similar to another provisional agreement which Iran Air has signed with Airbus to get 118 jetliners from the European aircraft maker.
However, no formal contracts have been signed yet, meaning all of these deals could fail, given the volatile dynamics of the West’s relations with Iran.
Presidential election factor
The tentative deals have already hit a speed bump because major global banks are refusing to handle transactions with Iran for fear of running afoul of US sanctions on the country.
One major roadblock was lifted last month when the US government granted Airbus and Boeing permission to sell aircraft to the Islamic Republic.
Some Iranians, however, believe the US is most likely to put up new hurdles even if it does not scrap the deal entirely.
They are disheartened by what the next presidential elections in the United States might have in store for the patchy relations between Tehran and Washington. Both current US presidential candidates are expected to adopt a much stricter line than President Barack Obama toward Iran.
Another detracting factor which could scupper the deals is opposition from the US Congress.
The US House of Representatives has already passed a motion to block the Boeing deal, with further measures proposed in Congress to bar certain transactions by US financial institutions connected to the export of aircraft.
If the proposed bills to restrict the deal become law, they would also affect other companies’ sales to Iran, including those by Airbus.
Looking for new options
Last month, Iran indicated that it was cutting the Airbus deal by six aircraft and clipping the contract with Boeing by one jet.
Reports also have it that Iran Air has been cooling towards the purchase of 12 A380 superjumbos that were part of the provisional deal.
Iranian airlines, meanwhile, are looking for other options. They have approached smaller aircraft manufacturers which they believe are easier to deal with.
Tentative deals have been signed with France’s ATR and Brazil’s Embraer, while Japan’s Mitsubishi and China’s Comac have held talks with Iranian aviation companies.
Such developments have taken the shine off the deals with Airbus and Boeing – the biggest for Western aviation companies in Iran since the Islamic Revolution in 1979.
However, neither of the two airline behemoths wants to lose one of the last untapped aviation markets in the world.
On Tuesday, Muilenberg described Iran “significant opportunity for us.”
“And I’m pleased to see that we’re making steady progress,” he said, adding Boeing was “in the final stages of working through the deal structure with our customers in Iran” while also working through the US government licensing process.