Boeing-Iran Deal for $16.6 Billion of Jets Is First Since 1979

  • Agreement reached Sunday has potential obstacles in Washington
  • Pact keeps Boeing in race with Airbus, supports 100,000 jobs

The agreement Iran’s national carrier reached with Boeing Co. to buy 80 aircraft valued at $16.6 billion is the first deal of its kind since 1979 -- and one that will force Congress and President-elect Donald Trump to balance their diplomatic priorities with U.S. job growth.

The deal includes 50 737 MAX 8s, 15 777-300ERs and 15 777-9s, the company said in a statement on its website on Sunday. The aircraft will be delivered over 10 years, the state-run Islamic Republic News Agency reported, citing Iran Air Chief Executive Officer Farhad Parvaresh. Deliveries will begin in 2018.

The pact reopens a market where Boeing hasn’t delivered a plane since 1977 -- two years before a revolution roiled Iran and set off four decades of tension with the U.S. Those feelings still reverberate, with Trump critical of a nuclear accord that opened a path to the plane deal and the U.S. Congress considering legislation that could scuttle the transaction.

Boeing noted that the deal was reached under the conditions of a U.S. government license issued in September and that the agreement with Iran Air will support almost 100,000 jobs in the U.S. aerospace industry. Iran is a critical market for Boeing in its competition with Airbus Group SE, said Loren Thompson, a defense analyst with the Lexington Institute, a nonprofit that has received funding from companies including Boeing.

"Boeing can’t compete with Airbus if it can’t sell to places like Iran and China," Thompson said. "Selling to Iran is a business imperative for Boeing."

Congressional Opposition

The U.S. Congress is considering legislation that could stop Boeing’s sales to Iran by barring the Export-Import Bank from financing planes and preventing the Treasury from authorizing U.S. bank transactions for a sale. The bill was approved in the House last month and is awaiting Senate action. The Obama administration has vowed to veto the measure.

Opponents of the Boeing deal pointed out that the Treasury imposed sanctions on Iran Air in 2011 for using passenger and cargo planes to transport rockets and missiles to places such as Syria, sometimes disguised as medicine or spare parts. At other times, members of Iran’s Revolutionary Guards took control of flights carrying sensitive cargo. Those restrictions were lifted after an international nuclear agreement was signed in July 2015.

The sale agreement is the first of its kind since the Islamic Revolution, according to Iran’s Ministry for Roads and Urban Development, and comes after most international sanctions on Iran were lifted as part of its nuclear deal with world powers. Boeing’s last airplane deliveries to Iran were 747 jumbos that arrived in 1977, according to the company’s website.

The deal’s value of $16.6 billion is based on list prices before big discounts that are customary for major airlines.

It’s still uncertain whether the Iranian carrier still intends to follow through with a separate transaction to lease nearly 30 Boeing aircraft. “We never intended to lease planes to them ourselves, just to help them find planes available from lessors,” said Tim Neale, a Boeing spokesman. “They would negotiate directly with the lessors.”

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