Iran Aims for Ambitious Aviation Revamp

By Robert Wall and Benoît Faucon 

TEHRAN--As Iranian officials scramble to reconnect to the global economy, one sector is getting early clearance for takeoff: its creaky aviation industry.

In a raft of early deals and talks following the lifting of broad economic sanctions against Iran, officials and aviation executives here have signaled they are targeting an ambitious revamp of the country's aviation infrastructure. Such a rebuild would come as Tehran already starts to renew its aging fleet of commercial jetliners. The moves could help lure more business to Iran as well as, eventually, tourism.

Tehran is tapping French airport operator Aéroports de Paris and construction-to-media conglomerate Bouygues SA to design and build a new terminal at Tehran's Imam Khomeini International Airport, according to people familiar with the matter. French construction firm Vinci SA is expected to develop and operate airports in Mashhad and another Iranian city, the people said. Both deals were first reported earlier Monday by The Wall Street Journal.

But Iranian officials are also courting foreign partners to help the country's aviation industry do everything from repair planes to rent jetliners. The sector has been hampered by decades of sanctions. Some of the workhorses of Iran's commercial aviation fleet are Boeings bought before the Iranian Revolution in 1979.

Iranian officials used the eve of the lifting of sanctions just over a week ago to announce they had agreed to buy over 100 new jets from Airbus Group SE, though the European plane maker itself hasn't confirmed any deal. Tehran played host this weekend to an aviation-industry conference here aimed at attracting foreign investors and partners.

"The Iranian aviation market is open," said Ahmadreza Bayati Doosti, deputy for international cooperation at the state-controlled Iran Airports Co. The country's transport minister, Abbas Akhoundi, said that in addition to expanding the capacity of Tehran's main international hub, Iran would court foreign direct investment to modernize its regional airports. The country has more than 60 operational airports. Only about 10 are used regularly because of the small Iranian aircraft fleet, the minister told the aviation conference here.

Iran also is in talks with potential French and Chinese investors to develop new airports in Ahvaz in the south of the country and the Persian Gulf coastal city Bushehr, said Bagherian G. Hossein, deputy chief executive for planning at the Iran Airports Co. The current airports are too close to their city centers, so green-field developments are planned.

Iran has begun negotiations with potential investors and is awaiting bids for the projects before picking developers for each site, Mr. Hossein said in an interview Monday. Because Iran's airport company lacks the funds to pay for development upfront, the winning bidders will build the facility and run it for a fixed period, after which ownership will transfer to the government, he said.

Deputy Transport Minister Asghar Fakhrieh Kashan said Iran also seeks to set up a domestic aircraft leasing company. The government has opened talks with two potential foreign shareholders he didn't identify. Iranian companies also are looking to foreign partners to help win foreign business. Farsco, the country's principal plane-repair company, is hoping to convince foreign airlines to fix jets in Iran because of the country's low cost of labor, said Mohammad Mirbagheri, the company's managing director.

Farsco wants to set up a joint venture with a major western plane repair organization to help secure outside business, he said. One potential partner, he said, is Deutsche Lufthansa AG, which operates a large maintenance, repair and overhaul operation. The German company didn't immediately respond to a request for comment.

Stacy Meichtry in Paris contributed to this article.

(END) Dow Jones Newswires

January 25, 2016 13:24 ET (18:24 GMT)

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