The withdrawal of the US from the Iranian nuclear agreement is a signal for failure of 38-billion-dollar air deals between Tehran and a number of Western companies. One of the main losers is the international Airbus consortium, which is expected to suffer more damage than its major rival, the US manufacturer Boeing.
Donald Trump announced on Tuesday that he withdraws the country from the treaty, with the administration returning the export license requirement required by aircraft manufacturers to sell Iranian products.
The Iranian authorities have ordered 200 passenger airplanes for the IranAir for a total 38.3 billion USD in a listing price, including 100 Airbus, 80 Boeing, and 20 of the smaller Italian-French aircraft manufacturer ATR.
Airbus risks more with wide-body aircraft, whose sluggish demand has forced the company to shrink its plans for production last month. However, the authorities in Iran have ordered 53 large aircraft from Airbus and 30 from Boeing, which are yet to be built. The loss of these orders is another blow to the latest model of the European manufacturer A330neo, which suffers from a weak demand before it was put into use. IranAir is the second-largest buyer in the region after AirAsia.
Meanwhile, Boeing CEO Dennis Muilenburg signaled that his company was no longer as dependent on the Iranian order as before, following an aggressive campaign to increase sales of its 777-300ER, which is part of the deal with Tehran. Manufacturers said they were looking at the US administration’s decision but refused to comment on the possible risks they face.
Meanwhile, both companies are not as worried about losing orders for a total of nearly 100 smaller narrow-body airplanes, as demand remains strong and there will be no problem shifting production to other buyers.
Airbus has already accepted the loss from the historic deal, which lengthy preparations ended with the signing of an agreement by Iranian President Hassan Rouhani in 2016 in Paris. The failure of airline deals with Iran is preparing to put a tougher blow on Airbus orders for 2018 than Boeing. This could eliminate all 86 net orders for Airbus this year.
Boeing is ahead with 221 net orders in 2018 and had to delay the Iranian deal for 16.5 billion USD – the largest with the US since 1979. However, Boeing’s wide-body airplane portfolio is not fully insured by risks.
Mixed are signals for the smaller but lucrative ATR. According to analysts, its deal with Iran is good and the company has already managed to deliver more aircraft from the larger manufacturers – 8 are already in use and may be delivered one or two before the 90-day period before the resumption of sanctions in August.
However, ATR will have to face costly decisions for the rest of its deal for 20 aircraft.
Although Airbus and Boeing are competitors on the 120 billion-dollar airline market, their deals with Tehran have united them, as both companies depend on the same US licenses. But with the rise of the opposition against Iran’s agreement at the US Congress, Boeing seems to change the tone.
