Boeing acknowledged Tuesday that Iran Air has signed a letter of intent to order airliners, confirming the U.S. manufacturer intends to challenge Airbus vigorously in the politically sensitive, but potentially lucrative Middle Eastern market.
"Boeing confirms the signing of a memorandum of agreement (MOA) with Iran Air expressing the airline's intent to purchase Boeing commercial airplanes," the company told ATW June 21.
The company declined to disclose details of the agreement with Iran Air. But the numbers discussed appear to be greater than 100 airliners, including about 70 narrowbodies and an unspecified number of 747-8 intercontinental passenger jets, according to sources familiar with the talks.
Iran, an oil-rich country of 82 million people, has been an outsider in international air transport for decades. But the lifting of economic sanctions early this year after Tehran agreed to curb its nuclear program opened the door for Iranian airlines to upgrade their aging fleets, which include 40-year-old Boeing 747s and 35-year-old Airbus A300s.
In January, Iran Air signed an agreement to acquire 118 Airbus jetliners: 45 A320 and A320neos, plus 45 A330 and A330neos, 16 A350-1000s and 12 A380s. Since then, there has been much speculation about whether and how Boeing would re-enter Iran's civil aircraft market, which Moody's estimates could generate demand for deliveries of 200-300 aircraft by the end of the decade and twice that amount by the mid-2020s.
In its statement to ATW, Boeing stressed that "all contracts with Iran's airlines will be contingent upon U.S. government approval."
Any deal runs the risk of political backlash from Capitol Hill, given the adversarial relationship between the U.S. and Iranian governments. In May, three House Republicans from Illinois, where the company is headquartered, implored Boeing not to do business with Iran.
"The greatest beneficiaries of any potential aircraft sale to Iran would be the Islamic Republic's despotic leaders," Reps. Peter Roskam, Robert Dodd and Randy Hultgren wrote in a letter to Boeing chairman and CEO Dennis Muilenburg. "The regime holds a majority ownership stake in Iran Air."
Rep. Rick Larsen (D-Wash) gave a different perspective in a June 21 statement. "Today's announcement is good news for Boeing and hopefully means more jobs for Washington state," he said.
An order from Iran Air for 747-8s would provide a vital lifeline to that assembly line. Boeing is sitting on three unsold 747s and is in the process of reducing output on the line to one aircraft every two months because of weak demand.
U.S. Aerospace Industries Association president and CEO David Melcher noted that in its dealings with Iran, Boeing was sticking to the rules set by the U.S. government. "Once the restrictions were lifted, any company had the potential to compete and try to win business with Iran," he told Aviation Week editors earlier in June. "I think the European companies probably have a head start on some of that."