Boeing and Airbus set to lose $39bn following Iran nuclear deal blow
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The world’s largest aeroplane manufacturers are set to lose Iranian contracts worth approximately $39bn, which were awarded to replace Iran’s fleet of commercial aircraft.
Following years of sanctions, the 2015 Joint Comprehensive Plan of Action – which was arranged between the UK, France, China, Russia, Germany and the Obama-led USA – halted Iran’s nuclear efforts in exchange for the lifting of heavy sanctions imposed by the UN, US and EU.
Following the signing of the agreement, Iran was able to negotiate with aerospace companies to upgrade its ageing fleet of commercial aircraft.
In December 2016, Airbus signed a contract to supply Iran Air – the flag carrier of Iran – with 100 aircraft for $19bn (£14bn). So far, Airbus has provided three aircraft; the first new aircraft in more than 20 years for the country. Boeing had arranged to provide 80 aircraft for Iran Air for $17bn (£12.5bn) and 30 aircraft for Aseman Airlines for $3bn (£2.2bn). Meanwhile, French-Italian aircraft manufacturer ATR had arranged to provide 20 aircraft to Iran Air.
However, following the announcement by US President Donald Trump that the US will be withdrawing from the agreement, reimposing sanctions on Iran, Airbus and Boeing will be forced to cancel its contracts. Although Airbus is based in France, it is subject to US sanctions due to a significant fraction of its aircraft components being sourced from US companies.
Trump described the Joint Comprehensive Plan of Action as “horrible” and “defective” and stated that it “should have never, ever been made”. The other signatories to the deal have said that they remain committed to the deal.
Steven Mnuchin, US Secretary of the Treasury, stated to reporters following Trump’s announcement that: “The Boeing and Airbus [export] licenses will be revoked.” He added that the White House would cancel waivers that allow for the sale of commercial aircraft components and services.
“These sanctions do impact all of the major industries. These are very, very strong sanctions; they worked last time. That’s why Iran came to the table.”
Most companies will have 90-day or 180-day grace periods to remove themselves from their operations in Iran. After this period, they could be penalised by the US government for breaching reimposed sanctions.
“We will consult with the US government on next steps. As we have throughout this process, we’ll continue to follow the US government’s lead,” said Gordon Johndroe, a Boeing executive, in a statement. Airbus has stated that it is “carefully analysing” the change in policy before deciding on its next steps.