Boeing Inks In $16.6 Billion Plane Deal with Iran

By Robert Wall and Asa Fitch 

Boeing Co. completed a $16.6 billion agreement to sell jetliners to Iran, the first major deal between a U.S. company and the Islamic Republic since Donald Trump, a critic of closer links with the country, was elected president.

Plane deals including one by European plane maker Airbus Group SE have been among the most high-profile transactions completed by the government in Tehran after western powers in January removed sanctions on the country in return for it agreeing to constrain its nuclear program.

The Airbus and Boeing plane deals have been staunchly opposed by critics of the nuclear accord with Iran. U.S. President-elect Donald Trump has attacked the Iran deal and threatened to undo it.

Mr. Trump has named retired Army Gen. Mike Flynn as national security adviser and Rep. Mike Pompeo (R., Kan.) as Central Intelligence Agency director. Both have voiced opposition to the nuclear deal. Lawmakers in the House of Representative also have sought to block airliner transactions to Iran.

The Boeing deal is valued at $16.6 billion, the Iranian government said on Sunday. The deal will cover deliveries to flag carrier Iran Air over the coming decade.

Iran's transport minister Abbas Akhoundi said the Boeing deal was "the first step for the renovation of the country's aviation fleet," and would soon be followed by the finalization of its deal with Airbus, according to Iranian state news agency IRNA.

Boeing, in a sign of how politically sensitive the transaction is, said on Sunday that it "coordinated closely with the U.S. government throughout the process leading up to the sale and continues to follow all license requirements as it moves forward to implement the sales agreement." The aerospace and defense company added that the deal would support U.S. jobs.

The contract could put Chicago-based Boeing again in the crosshairs of the President-elect. Mr. Trump last week fired a broadside at the world's largest airplane maker over a contract to develop and build a new fleet of Air Force One presidential planes. Mr. Trump tweeted the program should be canceled because of its high cost.

Though the election of President Trump has caused some uncertainty among companies looking to do business with Iran, some important projects are moving forward. Royal Dutch Shell PLC on Wednesday said it had signed an agreement with Iran's state oil company to explore future ventures.

France oil major Total SA has raised its profile in Iran too, reaching a $4.8 billion gas-development deal last month.

For Iran Air, replacing planes is a priority. After years of sanctions, some imposed in the wake of the Iranian revolution in 1979. the carrier operates some of the world's oldest airliners.

The Boeing order would cover 50 of 737 MAX single-aisle planes. It would include 15 777X long-haul jetliners, Boeing's newest jetliner still in development, plus an equal number of the current version of the twin-engine plane.

The U.S. Department of the Treasury's Office of Foreign Assets Control rules had to approve the license for Boeing and Airbus to sell planes to Iran. It gave the green light in September.

Some Iranian airlines remain under sanction because of U.S. allegations they have links to terrorist activities and Iran's weapons program.

Airbus in January agreed to sell 118 planes to Iran Air in a deal valued at around $25 billion at list price, though buyers typically get discounts. Airbus Sunday said it would not comment on talks with potential customers.

Write to Robert Wall at [e-mail] and Asa Fitch at [e-mail]

(END) Dow Jones Newswires

December 11, 2016 07:28 ET (12:28 GMT)

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