INTERVIEW: Iran Aseman Airlines agreement to purchase Boeing vs. Airbus and reasons for choice including 18,000 jobs sustained – #AceFinanceDesk reports – @AceFinanceNews


Iran Aseman Airlines Inks Deal With Boeing to Buy 60 B737-Max Jets
Iran Aseman Airlines has signed a Minute of Agreement (MOA) with the American plane giant Boeing to purchase 60 B737-Max passenger jets worth more than $5 billion based on catalogue prices. The document was signed on March 18, during a meeting with Boeing representatives in Tehran

After the agreement for purchase was inked for 60-Boeing 737 aircraft in controversial sale to Iran on Tuesday this interview was given to the Financial Tribune over reasons for choice “Aseman likely went with the 737-Max family for a number of reasons.
While the competing A320neo has been a big seller, Boeing has far better delivery openings for new customers,” Saj Ahmad, chief analyst at StrategicAero Research, told Financial Tribune..
CEO of Iran Aseman Airlines Hossein Alayi (L) shakes hands with James Larson, regional director for contracts at Boeing, in Tehran on March 18.Iran Aseman Airlines has signed a memorandum of agreement with the American plane-maker Boeing to purchase 30 B737-Max passenger jets worth $3 billion based on catalogue prices with the option of adding 30 more in the future.

“The agreement was signed on March 18 in the presence of Boeing representatives in Tehran … after almost one year of negotiations,” director general of the carrier’s public relations, Seyyed Amirreza Mostafavi, told Financial Tribune on Tuesday.

He said the deal is now pending licenses from the US Treasury Department’s Office of Foreign Assets Control, adding that Aseman expects to finalize a contract in three to four months.

Boeing confirmed the deal in a statement, saying the deliveries would be scheduled to start in 2022.

Iran Aseman Airlines, owned by Iran’s Civil Service Pension Foundation, is the second Iranian airline to order brand new aircraft from Boeing after the lifting of nuclear sanctions in January 2016, as part of the nuclear deal Iran clinched with the world powers earlier in 2015.

In December 2016, Iran Air finalized a deal with Boeing to buy and lease 100 jets including 50 narrow-body 737max 8s, 15 wide-body 777-300ERs and 15 777-9s, which will be delivered to Iran Air over 10 years.

Aseman’s deal with Boeing comes at a time when many believe the US President Donald Trump’s hardline stance on Iran has put the plane deals at risk.

The Wall Street Journal referred to the recent agreement as Boeing’s first agreement with an Iranian airline since Trump, a critic of closer ties with Tehran, took office.

Both Airbus and Boeing have received licenses from the US Treasury Department’s Office of Foreign Assets Control to supply 200 passenger aircraft to Iran Air. Airbus has agreed to sell 100 planes to the flag carrier.

Iran Air has already received three of the airplanes it ordered from Airbus. It is also in talks to finalize another contract with French-Italian manufacturer of regional planes ATR to purchase 20 aircraft with the option of adding 20 more.

ATR and the Iranian carrier have failed to reach a final contract as yet, amid uncertainty over licenses for engines made by a Canadian subsidiary of Pratt & Whitney. It is America’s top military engine-maker that supplies to the F-35 fighter project.

Political risks of dealing with Iran has forced Pratt & Whitney to take a cautious stance, at a time when Trump is attacking the F-35 project, as part of his general criticism to aerospace firms for going over budget.

Boeing vs. Airbus

While an Airbus order might have been a safer option, Mostafavi said Aseman is confident that the American company could offer better technical options considering the size of the order.

“Aseman likely went with the 737-Max family for a number of reasons. While the competing A320neo has been a big seller, Boeing has far better delivery openings for new customers,” Saj Ahmad, chief analyst at StrategicAero Research, told Financial Tribune.

On a technical standpoint, the CFM International LEAP-1B engine that powers the 737-Max is far more robust, fuel efficient and has better and longer on-wing time compared to the GTF engine on the A320neo, according to the expert.

“We have seen various press reports out of India about GTF-powered A320neo’s having countless engines being stripped/removed and replaced. With the 737-Max, Aseman will have no such issues. It is technologically better as well as lighter than the competing Airbus jets,” he said.

Aseman, however, is in talks to add two Airbus A340s and seven A321s to its fleet, which is the third largest in Iran after Iran Air and Mahan. Aseman’s fleet boasts three A320-200s, one A340-300, four ATR72-200s, two ATR72-500s, three B727-200s, one B727-200(F), two B737-400s and 19 Fokker 100s.

“The [Boeing] deal might also signal Trump’s willingness to better understand and approve deals with Iran. Why would he jeopardize a deal that brings thousands of jobs to Boeing and across the US aerospace supply chain? It’s a no brainer really,” Ahmad said.

The Boeing statement added: According to the US Department of Commerce, an aerospace sale of this magnitude creates or sustains approximately 18,000 jobs in the United States.”

Mostafavi said Boeing has received a green light from the US government and the procedures are in progress to receive supply permits.

Boeing says it negotiated the MoA under authorizations from the US government following a determination that Iran had met its obligations under the nuclear accord signed in 2015.

Boeing will look to the Office of Foreign Assets Control for approval to perform under this transaction ” Boeing continues to follow the lead of the US government with regards to working with Iran’s airlines, and any and all contracts with Iran’s airlines are contingent upon US government approval,” the statement said.

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