Pontifications: Airbus, Boeing still can sell planes to Iran Air

Hamilton ATR

By Scott Hamilton

Nov. 21, 2016, © Leeham Co.: The vote last week by the US House of Representatives to block Airbus and Boeing from selling airplanes to Iran Air doesn’t do this, even if the US Senate goes along and if President Obama changed his mind to veto the legislation and signed the bill instead.

The House bill only prevents US-sourced financing.

Cash and carry, or fund outside the US

This means Airbus and Boeing could (1) sell the planes to Iran for cash or (2) Iran could use non-US financing to pay for them.

It’s been reported that Dubai Aerospace Enterprises is already lined up to lease the first 18 Airbuses to Iran Air. No US money here.

Airbus and Boeing will only say they are working with regulators and will comply with any outcome.

What’s next

President Obama said he will veto legislation trying to block the Boeing sale should it reach his desk.

But what happens after Jan. 20, when Donald Trump takes office?

Trump said he will tear up the Iran deal, which he can only do in part. The US is one of six countries that are parties to the deal. The other five don’t plan to vitiate the deal.

The president-elect already has named people to his team who are adamantly opposed to any reconciliation with Iran.

The new Congress, which seated right after the first of the year, can adopt even tougher language in a blocking bill. President Trump will almost certainly sign that.

Only then will Airbus and Boeing be prevented from selling aircraft to Iran.

Immediate impact

For Boeing, the immediate impact means it’s unlikely the Iran Air order for 80 aircraft, including four 747-8s, 15 777-300ERs and 15 777Xs, will be booked this year. This makes it harder for Boeing to meet a 1:1 book:bill of around 745 this year.

Likewise, Airbus probably won’t book its Iran Air order for 116 aircraft, either.

With Trump’s election, it’s looking less and less likely that either Airbus or Boeing will complete their sales to Iran.

But for the moment, the bill by the House of Representatives doesn’t block either sale. It only prevents US money from financing them.


60 Comments on “Pontifications: Airbus, Boeing still can sell planes to Iran Air

  1. The double standards of US politicians is most amusing. So try and stop sales of airliners to Iran, but hey, let’s sell state of the art weaponry to Saudi Arabia and Qatar, the two biggest sponsors of terrorism out there.

    • You are being kind to call it double standards.

      I see where the whole budget is being based on claimed growth.

      What a crock

  2. Sukhoi likes this….

    Irkut and Comac might like this too if they had aircraft to sell!

    • In the meantime, Boeing and Airbus wrestle with the problem of how to limit the growth of these two airframers without alienating their national markets.

      You couldn’t make it up. F**k me politicians are stupid.

        • Voters tend to get the government they deserve / fits them well 🙂

          One thing I noticed: if the primary customer for a service ( here governing for the sovereign ) does not sufficiently care for the service rendered the system becomes infested with free loaders and other “eminently productive” individuals like “academic Jobsworth” . https://en.wikipedia.org/wiki/Jerry_Pournelle#Iron_Law_of_Bureaucracy

          • Nope. That analysis is wrong. The same electorate that elected Trump elected Obama. In both cases economic anxiety caused a change in partisan control of the Presidency.

            Trump won the general election because he was the Republican nominee. There was too much economic anxiety for the party in power to hold on to the White House.

            Trump won the Republican primaries because he was different from the others who split the majority of the vote.

          • We have Trump as president for the same reason Massachusetts has a republican governor: the entrenched democratic power structure pushed a candidate that non-primary voting democratic voters we not enthusiastic about and that GOP voters hated with a passion.

            turnout results show that Ohio, Michigan and Wisconsin losses were due more to low democratic voter turnout than to high GOP turnout (~2 million fewer democrats voted across those 3 states than 2012)

          • Trumps campaign drive was carefully crafted to reach voters via their cerebellum.
            No rational intention as foundation.
            i.e. Trump did not win on a programm but on subliminal emotions. Applied to just the right part of the electorate in just regional distribution.
            That _on how he won_. ( and there is a strong parallel to the BREXIT vote and its outcome.)

            No connection to how he will act in his presidential role.
            Dissecting his appointees might bring some clearness.

          • Uwe: I would say sort of, but you have a long past history to go by.

            That past history is very much like how a dictator runs his operation, competition power structures and in his case, the classic New Yorker screw everyone you can.

            The best tag I have seen is GropenFuher.

            Unfortunately the ignorant not only burn their own house down, they burn ours down as well.

            Unfortunately for the US (and the world) what is labeled economic anxiety has a huge racist, facist aka alt right components to it.

          • Agree mostly w/Bilbo. Lets hope U.S. institutions are strong enough to survive somewhat intact an uncorrupted for four years. Wishful thinking?

            Young people (likely Demo voters) bailed on this election. No Bernie no vote. Understandable but unwise.

          • US has Trump because the Republicans chose him and it was a very long shot that the Dems would win three terms in power. Three terms for any party has happened once in 65?? years.

          • Sort of, we have trump because of Electoral College, and lack of voters who are affected but did not come out.

            Sad state of commentary.

            Its not the institutions that are at risk, its US.

            One stupid statement, one dumb tweet and the damage that can do is profound.

            4 years of that?

  3. Scott,

    Could you please explain how the US government can prevent Airbus, a European Company, from selling Commercial airliners to Iran?
    I don’t understand how this would fall into their (US Government) jurisdiction.

    Could it be because some parts of the aircraft come from the US?
    Or could it be a diplomatic issue?

    Thanks in advance.

    • Parts. They can slap an embargo on many of the suppliers so their parts cannot be sold to Iran directly or knowingly indirectly.

      Although it probably wouldn’t be enough to stop Airbus selling (or greasing the rails for any sale/lease of) say, used A330, A340 or… A380 to Iran.

    • Since more than 10% of the parts are from USA, any sale can be veto by the American Gouvernement.

  4. From the Reuters report: “The measure would bar U.S. Treasury Department from issuing licenses that U.S. banks would need to finance sales of commercial aircraft …”

    Is the license required only for the financing and not the transfer of the plane? Seems more reasonable that the license permits the sale and transfer, as well as financing. But then, it’s politics, so reasonable probably doesn’t figure in.

    • @Paul: The House legislation only prevents US-sourced funding. It doesn’t prevent the cash-and-carry sale, or financing outside the US.

      • Thanks for the reply. But, as always, one thing leads to another. In this case, when BA acknowledged a possible order from Iran, it issued the following statement (according to the AP):

        Boeing will continue to follow the lead of the U.S. government with regards to working with Iran’s airlines, and any and all contracts with Iran’s airlines will be contingent upon U.S. government approval.

        If BA really meant that, then perhaps Iran is being treated differently from say, Japan, and there would be no such thing as cash and carry?

        • No, Boeing is going to try to sell aircraft to Iran.

          It will be interesting if they get the deal signed and then if legislation can post defacto stop it.

          Of course these are the same people who claim to have our economic interests at heart.

        • @Paul, What Boeing says is that it will follow the lead of the US government. As a defense contractor, I’d expect nothing less.

          What it does as a matter of policy vs what it can do legally are two different issues.

          And of course Iran is being treated differently than Japan.

        • Most leasers are based in Ireland? Probably not a problem after all?

  5. Questions inside Iran:
    “No new aircraft? What shall we do with all the money? Let’s invest in a big bomb…”

    The deal was inspection of the Iranian enrichment plants and the embargo will end.

    Iran is required to help cleaning up the mess the US made in the Middle East.

    • “Iran is required to help cleaning up the mess the US made in the Middle East.”

      The US has definitely not stopped making a mess there.
      More like stepping on the pedal in the other direction.

      • Russia is the next power to fall into the ME trap. Putin can´t help it really, so many Russian muslims in ISIS due to their treatment at home, and what help will ISIS send back to the southern Russians if it survives? Obama govt. has been sitting on the fence smiling, throw a few bombs occasionally to let the world know he´s looking but otherwise leave it to the Russians to get dirty.

  6. I don’t think it’s wise for the U.S. to be selling commercial aircraft to “state sponsors of terror” like Iran (nor, by the way, to state oppressors of peoples–like Tibetians and Uighurs–that we’ll probably be at war with in the next few years over the SCS.) If Boeing’s management had any moral principles, they could “lead the way” on this (just say “no” to these sales) , aside from the Government’s position. But they don’t, too bad. (Damn, this is kinda fun. People on the right can get ride their moral “high horses” too in this time of silly sanctimony. LOL)

    • So you don’t like the idea of Iranians being able to fly in modern, safe airliners? What does not selling commercial airliners to Iran achieve, apart from further isolating Iran?

      Do you agree with selling arms to the likes of Saudi Arabia and Qatar who do far more than Iran to promote Islamic terrorism?

          • And Russian won’t sell them aircraft?

            Lets see, so instead of us getting the money and jobs, China does and to what end?

            Just so we can have a war with Iran?

            Good luck, I am too old to get drafted.

            Can you say quagmire? Sure you can.

      • One, there’s no reason I can think of that they can’t be safe in Russkie Tupolevs and Sukhois. (They want to be in Cadillacs and Benzs, but Ladas will get them there–safely.) Two, let’s stay on topic-Iran. But if we’re veering off, then last time I checked, whatever their internal politics, Saudi Arabia and Qatar are avowed US allies. (They would be helpful, presumably, in any necessary multiplayer/Tomahawk engagement(s) to repel any Irani aggression in the Arabian Gulf.)

        • Tupolevs? Which Tupolev exactly? Ha ha ha ha!

          So you’re OK with them having some regional jets, but not proper airliners?

          You’ve obviously been drinking the “avowed allies” koolaid.

          • One, Tupolev 204SMs. (Russian 757skis), and Ilyushin IL96s. Two, we haven’t really yet settled scores yet for the Hostage Crisis”, and Khobar Towers. I always liked the apocryphal story of the Russian general talking about it after the Iranian Hostage Crisis:: “You Americans! If they tried that with us, Teheran would be a glowing parking lot!”

          • Tu-204? A plane nobody wants. They’ve delivered four in the last three years.

            Il-96? Even worse. A plane only operated by Russian Government agencies and Cubana. Four delivered in the last six years!

            Seriously, what scores are left to settle? What have the sanctions and asset freezes been doing for the last 35 years? What do you want to do, shoot down more Iranian airliners?

            It would be far better to have a vibrant and blossoming Iran inside the international community than try and isolate it and turn it into a pariah state like North Korea.

          • Why don’t we let them have the gulf?

            Is there anything there we care about?

            Avowed partners?

            Funding terrorists, cause of the 9/11 towers coming down, what’s not to like?

          • Stealth 66: You asked, I answered. Both the Tupolevs and Ilyushins I noted are perfectly serviceable, safe aircraft. This is still a despicable outfit running Iran–detaining US citizens, fomenting Houthi and Syrian terrorism, and pulling the old Persian rug merchant tricks on the O-man and Kerry for cold, hard cash. They had carried out several mock executions of US hostages. I’d draw the line at shooting down “innocent” airliners, but recommend we have a thousand Tomahawks ready to go the first night they really step out of liine!

          • “I’d draw the line at shooting down “innocent” airliners, but recommend we have a thousand Tomahawks ready to go the first night they really step out of liine!”

            Look at what the US has done to Iran over the years ( and that was never ever mentioned by CNN or FoxNews.)
            Whatever gets your goat in foreign affairs: What you berate is REACTION. (That goes back to the Cuba Crisis and beyond.)

          • Your warmongering aside, why do you feel the need to quote the word innocent when referring to Iranian civilian airliners? In what way are they anything but innocent?

          • Uwe: Until they prove otherwise, I’d say I’m going with the assumption they’re busy–as always–trying to get my goat, and fry it! Sealth 66: Forewarned is forearmed. There’s no “warmongering” involved (Absolutely none). Just have the 12/07/41 lesson of PEARL inculcated. Who’s to say the “innocent” airliner shot down wasn’t an Irani “false flag” operation, sacrificing their own citizens? And they’re such great current peacekeepers–just ask their neighbors the Syrian people, like those in Aleppo!

  7. It will be a get rich quick scheme for third parties.
    Although I dont think the Tomcats are still operational, they flew for years despite embargoes. and not too many operators of the type.

  8. Let’s all remember that Washington is a blue state. Wonder if it would be different if the state voted for Trump.

  9. No, this insanity has been rampant for some time.

    I remember when the NeoCons said we could have a pre-emptive strike against Iran and it would NOT be an act of war and Iran would understand it

    It was written up in Av Week.

    Those people are insane and its not the Iranians

    Unfortunately what all too many people fail to understand is that the President Elect does not have a plan, he has a bunch of pinballs ricocheting around in his head.

    Someone who pursued the Birther thing is simply off his rocker.

    Want to remember who else was like that?

    Be afraid, be very afraid.

  10. Great opening for China and Russia though.

    Both have interesting offerings in single aisle and the wide aisle thingy will come along eventually.

  11. Everyone: This is getting a little too political (@TransWorld); ratchet it back.

  12. Trump campaigned on the motto “I’ll run this country as a company” and if we believe what we hear, Trump knows how to make money for himself, so why not lend him the benefit of doubt for USA Inc. ? Any successful P&CEO these days has a staff box on the Organization Chart sticking out to the right just beneath his own box, where he’d put a team of savvy wizzards, people he listens to. The President of USA Inc. will do no less, so we may sit back and relax : things won’t differ much, because if the perspective appears to have refocused, the overall picture hasn’t changed much, so the solutions will end up being the same…

    • I may get smacked by Scott, but if he runs the US the way he ran his companies, God Help US.

      • The US bankruptcy court shows in multiple cases ( 6x ?) the Trump Organisation suffers little and its the little people who take the losses. The recent Trump University fraud case settlement , shows how Trump ‘does business’ where the courts are used to string the little people along for ever , unless a more lucrative deal comes a long.
        Boeing would have lasted anything as long as it had if it run his business like Trump does his ( financial experts have considered that Trump could have taken his $200m inheritance and invested it wisely and done much better than using his ‘business acumen’)

        • Scott: I can’t help it, let me know what the ban penalty is.

          Trump also got huge salary for his part of what was going down the toilet. Sometimes know as gutting the company. Also actionable.

          900 million loss, seriously?

  13. @TransWorld, Uwe, Stealth and Montana: I said stop the over-the-top political stuff. You’ve succeeded in prompting me to close comments.

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