The U.S. withdrawal from a nuclear accord with Iran slams shut what had been a brief opening for historic aircraft sales by the Boeing Co. and Airbus.
President Donald Trump’s announcement that the U.S would seek to reimpose sanctions left little hope that the companies will be able to consummate $40 billion in aircraft deals with Iranian carriers that were made during a brief trade thaw. Both companies’ export licenses to Iran will be revoked, Treasury Secretary Steven Mnuchin told reporters.
The plane orders, badly needed to upgrade the Islamic Republic’s museum-vintage airliners, would have had the potential to build Tehran into an aviation hub that could better compete with Dubai and Qatar, the region’s aviation super powers.
They also represent a lost opportunity for Chicago-based Boeing and Toulouse, France-based Airbus. The European plane-maker is subject to U.S. export restrictions to Iran because more than 10 percent of the parts on its jets originate with U.S. companies such as United Technologies Corp., Rockwell Collins Inc. and General Electric Co.
“We will consult with the U.S. Government on next steps,” Gordon Johndroe, a Boeing vice president, said in a statement. “As we have throughout this process, we’ll continue to follow the U.S. Government’s lead.”
Airbus said it will “carefully analyze” the implications of the U.S. withdrawal from the nuclear deal with Iran before deciding how to proceed. “This might take some time, ” a spokesman for the company said by email.
Democrat members of the state’s congressional delegation criticized Trump’s decision to exit the multinational agreement and consider the potential negative effect on Boeing — the state’s largest private employer — as a disappointing consequence.
Withdrawing “is a reckless move that undermines our credibility on the world stage, and worse, puts our national security at risk,” said Democrat U.S. Rep. Suzan DelBene, of Medina, in an email. DelBene represents a swath of east Snohomish County. “This, like so many of the Trump administration’s reckless policies, will carry unintended consequences that create chaos for Americans and our allies,” she said.
But two Republican House members from Washington praised the president for getting out of a flawed agreement.
“As additional sanctions are put in place, we must continue to work with our allies to form an agreement that addresses not just Iran’s nuclear capabilities, but all of their destabilizing activities that impact our security and the security of our allies,” said Rep. Dave Reichert, of Auburn.
While the Obama administration had licensed the sales by both Airbus and Boeing to Iran Air in late 2016, the companies handled the orders very differently. Airbus recorded the sales in an order backlog and delivered three jets, while its ATR venture shipped eight turboprops.
Boeing never closed its transaction with Iran Air and downplayed the historic deal’s prospects after Trump took office. In recent months, Boeing has quietly lined up other customers for some 777-300ER jetliners once intended for Iran Air this year.
“Looking back, they took very different approaches: Boeing was very conservative in booking and building, and Airbus was very aggressive,” said Richard Aboulafia, an aerospace consultant with Teal Group.
Airbus has 95 undelivered planes bound for Iran Air in its backlog. They include 16 crucial orders for the A350 wide-body and 28 for its yet-to-be-delivered A330neo. Another 12 smaller turboprops, manufactured by ATR, are still due to be delivered to Iran’s national flag carrier.
As for Boeing, a 2016 agreement with Iran Air called for delivering 50 single-aisle 737 Max 8s, which are assembled in Renton, and 30 777s, the wide-body, twin-engine plane manufactured in Everett. The sale, valued at $16.6 billion, represented the biggest agreement Iran had struck with an American company since the 1979 revolution.
In April 2017, Iran Aseman Airline announced an agreement to buy 30 of Boeing’s 737 Max aircraft plus an option for 30 more. The announced value of the deal was $3 billion. As of last fall, the deal had reportedly not been finalized.
Figures for each agreement are list prices and Iran would likely pay Boeing far less and would be spread over many years.
But, cognizant of the shifting political landscape, Boeing officials never included those planes in its announced delivery backlog.
“We have no Iranian deliveries that are scheduled or a part of the skyline this year, so those have been deferred in line with the U.S. government processes,” CEO Dennis Muilenburg told investors April 25. “The production rate that we’ve put in place is not dependent on the Iranian orders. If those orders do come to fruition, if we do ultimately deliver airplanes, those represent opportunities for us.”
Investor reaction was muted since Trump had long been critical of the nuclear pact. Boeing shares dipped less than 1 percent to $338.49 at the close of trading in New York, while Airbus shares were little changed in Paris.
In the meantime, political reaction was loudly partisan in Washington’s congressional delegation.
“I continue to believe that this deal offers us the best path to safety and security for our country and our allies, and the best approach to preventing Iran from developing a nuclear weapon,” Democrat Sen. Patty Murray said. “Holding this brutal regime accountable becomes much more difficult if Iran is racing toward the bomb instead of being constrained by the terms of the deal.”
But Rep. Cathy McMorris Rodgers, of Spokane, argued the flawed deal did not prevent Iran from obtaining or developing a nuclear weapon.
“The President is right — we need a better solution that ensures the safety and security of our nation and of our allies, including Israel,” she said in a statement. “Together, we must apply enhanced pressure on Iran with strong sanctions and robust inspections that will dismantle its extensive nuclear infrastructure.”
Rep. Rick Larsen, of Everett, said in a statement that the president needed to put forth a “realistic strategy” for replacing the deal and not “simply boast that he would have negotiated a better deal.”
And he expressed concern the U.S. will now be viewed as a less credible negotiating partner in any future multilateral accord.
“If a change in administration causes the United States to renege on a successful international agreement, why would any country pursue future negotiations with the U.S.?” he said.
Herald writer Jerry Cornfield contributed.