Business First Look

Iran's first new Airbus to arrive in weeks under sanctions deal

Iran expects to get the first of its new Airbus jets in mid-January, under a multibillion-dollar deal after sanctions against the Islamic Republic have been lifted.

An Airbus A321 sits in the final assembly line hangar at the Airbus U.S. Manufacturing Facility in Mobile, Ala., in September 2015.
Michael Spooneybarger/Reuters/File | Caption

Iran’s plans to modernize its aging fleet of civilian airliners look set to take off, with the first of 100 Airbus planes slated for delivery as soon as mid-January.

The deal with the European manufacturer comes on the heels of a similar agreement with its US rival, Boeing, under which the Islamic Republic is to buy 80 jets.

Both contracts have become possible under the terms of the nuclear deal hashed out between Iran and the international community, which lifted an array of sanctions. Yet the threat of uncertainty still lingers, with conservatives in both Tehran and Washington voicing criticism – not to mention President-elect Donald Trump’s opposition to the nuclear agreement.

"We have finalized negotiations with Airbus and any day we will be able to sign the deal in Tehran," Iran’s deputy Roads and Urban Development minister Asghar Fakhrieh Kashan told Reuters. "We are expecting some final clearances and expect to sign today or tomorrow."

Sanctions were lifted in January, but months of regulatory delays meant that such deals are only now coming to fruition. It was just over a week ago that Iran signed the Boeing deal – its biggest contract with a US firm in nearly 40 years.

The first Airbus delivery could arrive before Mr. Trump’s inauguration on Jan. 20, and long before Iran’s presidential election, which is set for May of next year. Indeed, if the deal proceeds as planned, it could give a boost to Iranian President Hassan Rouhani, who has drawn criticism from conservative quarters for having entered into the nuclear deal.

It would also provide some respite to Airbus, which has had orders delayed or canceled by other customers because of economic headwinds.

Both of the deals have required – and been granted – approval from the Obama administration, as both Boeing and Airbus use US parts in their planes. Some analysts say that with a changing political situation in Washington, those decisions could be revisited.

"We are not concerned, although we should not ignore such a possibility,” Mr. Kashan told Reuters. “The fact is that Mr. Trump may impose certain new sanctions, but we would consider that to be a violation of the JCPOA [nuclear accord], which explicitly provides for the possibility for the purchase of aircraft and their sale by manufacturers.”

There is, however, another threat that hangs over the Boeing deal in particular: legal action being taken by an Israeli advocacy group, demanding that Tehran pay billions of dollars worth of damages to relatives of victims of Iran-sponsored militant activity.

The Shurat Hadin-Israel Law Center has filed papers in Illinois seeking to seize the Boeing planes until damages are recovered from the Iranian government. Whether the case achieves material success or not, such action aims to create publicity at the very least.

“These cases can be very impactful,” Matthew Levitt, director of the counterterrorism program at The Washington Institute for Near East Policy, told Reuters, “both in terms of creating a legal record of Iran's support for terrorism and in terms of providing closure and financial compensation to the victims and their families.”

This report includes material from Reuters.