PARIS (Reuters) – America’s withdrawal from the Iran nuclear accord signals the collapse of $38 billion in plane deals between Tehran and Western companies and leaves Airbus facing greater risks than arch-rival Boeing, according to people involved in the deals.
President Donald Trump announced on Tuesday he was pulling his country out of the 2015 accord, and his administration said it would revoke export licenses needed by planemakers to sell commercial planes – which require U.S. components – to Iran.
Tehran has ordered 200 passenger aircraft for state carrier IranAir worth $38.3 billion at list prices, including 100 from Europe’s Airbus , 80 from U.S. rival Boeing and 20 from smaller Franco-Italian turboprop maker ATR.
Airbus is more exposed on wide-body jets, for which sluggish global demand forced it last month to revise down part of its production plans. Iran has ordered 53 wide-body jets from Airbus and 30 from Boeing, which are yet to be built.
Losing the order deals a further blow to Airbus’s newest wide-body jet, the A330neo, which faces weak demand months before it enters service, three industry sources said. IranAir is its second-largest airline buyer after AirAsia.
By contrast, Boeing Chief Executive Dennis Muilenburg signaled last month that his company was no longer as dependent on the Iran orders as it had been, following an aggressive effort to improve sales of its current-generation 777-300ER wide-body jets which were part of the Iran deal.
Airbus and Boeing said they would study the U.S. decision, but declined to comment on the risks they faced.
“We will do the right thing,” Jeff Knittel, chairman of Airbus Americas, told Reuters.
Neither planemaker will be as concerned about the potential loss of a total of around 100 narrow-body plane orders from the Iranian deals, as demand for those jets is strong and they will have no problem in allocating production slots to other buyers.
Two European sources said Airbus was resigned to losing the historic Iran deals which had taken months of preparation, culminating in a Paris signing by President Hassan Rouhani in 2016. Rouhani said on Tuesday Iran was committed to the deal.
AIRBUS ‘COMES OUT WORSE’
A collapse of aircraft deals struck under the nuclear pact would also hit Airbus’s 2018 order book harder than Boeing’s.
A cancellation of Airbus’s Iranian orders – which it booked early to pip Boeing in the 2016 order race – could wipe out its entire tally of 86 net orders for this year. Investors keep an eye on new orders as a gauge of jet market confidence.
Boeing is ahead with 221 net orders for 2018, and had delayed booking the orders from its $16.5 billion Iran contract – Iran’s biggest with America since the 1979 revolution.
“Airbus was very aggressive about booking orders and delivering planes and Boeing were very conservative; Airbus gets hit a bit worse,” said Teal Group analyst Richard Aboulafia.
Still, Boeing’s wide-body portfolio is not without risk.
Boeing CEO says end of Iran deal won’t hurt 737 production
Boeing Co’s chief executive said on Wednesday the company will ensure its 737 production will not be hurt after the U.S. revoked its license to sell jets to Iran Air and that none of the 737 aircraft it had expected to sell to Iran were in the backlog of orders.
Reuters
