December 11, 2016
Iran's official news agency, IRNA, said this morning that the Islamic Republic has signed an agreement with The Boeing Co. (NYSE: BA) to purchase 80 aircraft valued at around $16.6 billion.
An Iran Air Boeing 747 passenger plane sits on the tarmac of the domestic Mehrabad airport in the Iranian capital Tehran on January 15, 2013.
December 11, 2016
Iran's official news agency, IRNA, said this morning that the Islamic Republic has signed an agreement with The Boeing Co. (NYSE: BA) to purchase 80 aircraft valued at around $16.6 billion.
An Iran Air Boeing 747 passenger plane sits on the tarmac of the domestic Mehrabad airport in the Iranian capital Tehran on January 15, 2013.
The deal comes less than a month after the U.S. House of Representatives passed legislation that would prohibit the Treasury Department from issuing licenses for aircraft sales to Iran thus making it impossible to finance the sales.
The order, which was first revealed in June, comprises 50 737 MAX 8s, 15 777-300ERs and 15 777-9s.
IRNA's announcement contained just two sentences:
Iran Air and the American Corporation of Boeing signed an agreement on selling 80 aircraft to Iran, managing director of the Civil Aviation Organization of Islamic Republic of Iran announced.
On the sidelines of the signing ceremony held in Tehran on Sunday, Farhad Parvaresh said the airplanes will be delivered to Iran during a ten-year period.
In a statement released later Sunday morning, Boeing said:
Today's agreement will support tens of thousands of U.S. jobs directly associated with production and delivery of the 777-300ERs and nearly 100,000 U.S. jobs in the U.S. aerospace value stream for the full course of deliveries. The first airplanes under this agreement are scheduled for delivery in 2018.
If the sale is a metaphorical poker game, Boeing has just seen the last political raise and bumped it by $16.6 billion and 100,000 U.S. jobs. Congressional Republicans want to scuttle the agreement between Iran and the six-nation coalition, including the United States, that relaxed sanctions on the Islamic Republic in exchange for a halt (or at least a slowdown) to Iran's nuclear development program.
Last week President-elect Donald Trump called out Boeing for what he claimed to be an excessive price for two new 747-8s the Air Force has ordered to replace Air Force One. Trump's tweet followed a comment from Boeing CEO Dennis Muilenburg calling for a renewed charter for the U.S. Export-Import Bank or face the loss of sales to foreign countries. The President-elect called for elimination of the bank when he was campaigning for office.
In September Boeing received a license from the Treasury Department to sell up to 109 new airplanes to Iran, the 80 included in Sunday's announcement plus 29 others that Boeing will acquire from leasing companies. That license enables Boeing to assist Iran in lining up U.S. bank financing for the sale.
And because Iran cannot afford (or is unwilling) to pay cash for all of these planes, the country will have to seek financing in order to make the purchases. The Ex-Im Bank figured heavily in that calculation.
Will Congressional Republicans push more chips onto the metaphorical poker table? With the inauguration of President-elect Trump just a few weeks away the likely tactic will be to make some noise now but to wait until Trump is safely in office before tackling the Iran deal again.
One thing Sunday's agreement will do is allow Boeing to add the 80 planes to its order book. That will lift the company's total sales for the year from 468 to 548, still well short of the company's goal of a 1:1 book-to-bill ratio. Boeing expects to deliver around 745 to 750 new planes in 2016.
Courtesy: Wall Street
