Airbus Signs USD$27 Bln Iran Deal For 118 Planes

Airbus has signed a deal to sell Iran 118 planes worth USD$27 billion at list prices, including a dozen A380s, after international sanctions were lifted against Tehran this month.

The plane maker said the deal, signed amid a raft of others during a visit by President Hassan Rouhani, was conditional on getting US export licenses because more than 10 percent of Airbus airliner parts come from the United States.

The order for 73 wide-body and 45 narrow-body jets allows Airbus to steal a march on Boeing as Iran seeks to renovate and expand its worn-out fleet of 225 planes.

The inclusion of A380s sends a commercial signal to established carriers in the Gulf, and is a boost for Airbus, which has been struggling to sell them. However, they will not be delivered before end-decade as Iran expands its airports and focuses on urgent needs.

Boeing has so far held back from Iran amid what industry sources and diplomats describe as political and legal concerns, but Iranian officials are urging it to mimic its European rival.

The Airbus deal depends on unraveling a knot of financial issues including whether and how Iran can avoid using the US financial system for the aircraft.

Deputy transport minister Asghar Fakhrieh Kashan told Reuters news agency the deal would be financed using a mixture of European export credits – which guarantee loans by commercial banks – and lease financing.

In an unusual move, Iran plans to set up a national leasing company with foreign investors invited to take a stake and no automatic restriction on basing it outside Iran.

But problems need to be ironed out on rules for export credit deals amid quibbles over collateral.

The deal was negotiated partly on the sidelines of a major CAPA aviation conference in Tehran this week, where Iran outlined requirements for 400-500 planes and offered flexible new regulations.

"It was the first international platform for Iran to say we are back in business" since implementation of the deal ending sanctions on January 17, Bertrand Grabowski, a managing director of DVB Bank, said.

Other models ordered include 45 A320-family jets and 45 longer-haul A330s. Both those sets of orders included current and updated models and helped lift the list value of the deal from earlier estimates of USD$25 billion.

Iran also ordered 16 long-range A350-1000 twin-engined jets.