Boeing seals $16 billion deal with Iran, Airbus to follow

Iran signed a $16.6 billion deal with US aerospace firm Boeing on Sunday, finalising the largest agreement signed since the country’s 1979 Islamic revolution.

Iran have agreed to buy 80 Boeing passenger jets, including 50 narrow-body 737 MAX aircraft and 30 long-haul 777s. It also represents the first major deal since sanctions were lifted against Iran, whose air force has been largely maintained by smuggled or improvised parts.

However, the Iranian official added that the deal was still subject  to further agreements on financing. A financing plan is in place for 15 777-300ER jets, which are expected to be delivered from 2018.

Boeing’s deal with Iran is likely to spark political opposition, with President-elect Donald Trump opposing the deal made in January which saw the removal of global sanctions against Iran. Last month US House of Representatives passed a bill seeking to restrict financial transactions by US banks in order to block Western passenger jets to Iran.

Boeing and Trump were also at loggerheads last week after Trump criticised the cost of replacing Air Force One jets, leading Boeing to say that they would work with the government on costs. The President-elect also disrupted relations with China, who account for a fifth of Boeing’s deliveries.

An Iranian official also confirmed that it was close to securing a deal with Boeing’s European rival Airbus, which is likely to be completed within the next week and is expected to involve a first batch of between 50 and 60 jets. Airbus were the first company to make moves in Iran following the removal of sanctions, making a provisional agreement for 118 planes.

Boeing (NYSE:BA) shares are currently up 0.71 percent at 156.49, with Airbus (EPA:AIR) up 0.40 percent at 59.82.

 

 

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