Airbus Frets Over House Iran Vote With $27 Billion Deal at Stake

  • Intervention comes at critical time in negotiation of contract
  • Even if Obama wields veto, Trump could intervene next year

Airbus Group SE said it’s evaluating the implications of a congressional vote that could block it and Boeing Co. from providing jets to Iran, though hasn’t given up on completing a $27 billion order announced in January.

Airbus will wait to see how the U.S. Senate and President Barack Obama respond to the House decision, Claude Brandes, its vice president with responsibility for customer finance in the Mideast, said in an interview. Even if the Iran sale wins a reprieve, the vote has created a “state of uncertainty” just as the European company is negotiating final terms.

“Whatever the substance of the measure it’s not great in terms of timing,” Brandes said. “We need to see the wording and we need to see how the Iranians react.” Whether or not Obama vetoes the House measure, as the White House has suggested, it “doesn’t bode well” for when President-elect Donald Trump takes over, he said. Trump has said he wants to tear up or renegotiate the nuclear deal to which the aircraft sales are tied.

Brandes said Airbus might be able to go ahead with the delivery of a single A321 narrow-body before the end of this year should Iran pay in cash, though the aircraft “was discussed as part of a package” and a final contract would still need to be signed. The planemaker had also discussed supplying four A330 wide-bodies by May, he said.

Even if the Airbus deal survives Republican opposition, it may not translate into a firm contract for all 118 aircraft specified, given that Iran signed an accord with Boeing for 109 planes five months later, with the final split between the manufacturers remaining in a state of flux, the executive said.

The eventual numbers may be determined by Iran’s success in securing funds, which has been complicated by the political sensitivities of the deal. While the U.S. Treasury Department in September granted Airbus a license to supply the first 17 jets, the Mideast state is seeking financing from Dubai Aerospace Enterprise, which would require further authorization, Brandes said.

Iran wants jets including Airbus’s most modern A350 and the A380 superjumbo, and has signed up for 747 jumbos, the 777 and 777X upgrade from Boeing. The U.S. company is looking to provide 80 aircraft worth $17.6 billion directly, plus a further 29 jets via leasing companies.

Republicans in Congress strongly oppose the 2015 agreement between the U.S. and five other nations, including Russia, that is designed to stop Tehran from developing nuclear weapons. Iran agreed to redesign and reduce its nuclear facilities in exchange for relief from economic sanctions.

The legislation is H.R. 5711.

— With assistance by Deena Kamel

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