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U.S Officially Withdraws From Iran Nuclear Deal – $38 billion of Orders Canceled

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U.S Officially Withdraws From Iran Nuclear Deal – $38 billion of Orders Canceled

U.S Officially Withdraws From Iran Nuclear Deal – $38 billion of Orders Canceled
May 09
13:34 2018

LONDON — It was announced yesterday that United States President, Donald Trump, has officially withdrawn from the Iran Nuclear Deal, which offered the State of Iran certain levels of aid in return for the country not developing their nuclear program. This is an important moment in the industry because it means that the $38 billion in orders accrued by Airbus and Boeing for carrier Iran Air may not be able to go ahead.

READ MORE: Analysis: Middle Eastern Airline Giants Cut Back US Service In the Age of Trump

As sanctions are now going to be placed by the United States, this means that the aircraft on order will now be canceled. The details of the deal, known as the JCPOA, showed that the US government OFAC licenser had to approve the orders to Iran Air due to the current ongoing crisis in the country. Airbus would still need this same approval as over 10% of the parts on Airbus aircraft are manufactured in the US, which offers another blow to them. As a result, shares in Airbus fell 1.1%.

CEO of Iran Air Farzaneh Sharafbafi said that “the airline will take two weeks from now to study the situation and lay out plans for aircraft deals”, which shows he is remaining hopeful about still importing some of these deals into the country.

READ MORE: Airbus Unveils Orders & Deliveries for April 2018

With Boeing’s license also being revoked as part of these new sanctions, it may force Iran Air to look further east towards the likes of COMAC, who have the C919, which offers the same sort of middle-range aircraft operations that Airbus and Boeing have put on offer, but ultimately a gap will remain in the long-haul network.

But even then, the importation of the C919 will be a struggle too because key systems such as the engines, cockpit, radar, landing gear, tires, flight data recorders and APUs are all made in the United States.

Airbus, however, was fast to act on the sanctions. One A321 and two A330s were already imported to Iran soon after the sanctions were lifted so the aircraft will be allowed to continue flying as their license will be operable during the new fresh level of sanctions.

It seems that Iran now has got themselves into a corner on the aviation front. Because most of the aircraft parts across most manufacturers are constructed in the US, it disables them from being able to buy the majority of any aircraft types from anywhere in the world.

READ MORE: Etihad’s Posts $2 Billion Loss: Airbus, Boeing Concerned

Still, they could turn to Russia, who with the likes of Ilyushin and others could get some aircraft produced for them. It may have to lie into the perspective of Iran having to use what they currently have in their fleet before sanctions were reimposed, such as the Airbus aircraft already delivered.

This, nevertheless, is ultimately a big blow for Airbus and Boeing, who have quite an extensive backlog already, which is a lot of revenue they will now have to minus in their financials. It could ultimately alter levels of operation in terms of production rates on certain aircraft with the potential for delays as a result of such an alteration in said rates. It will be interesting to see how the manufacturers adapt to this significant change and whether the loss of potential revenue from these orders will hit them or not.

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About Author

James Field

James Field

James is a passionate AvGeek based in Manchester, U.K who has been actively spotting for years. James has been an Aviation Enthusiast for 8 years and has a fond likening to Concorde! James hopes to grow in the aviation industry with journalism being his primary focus.

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3 Comments

  1. walterhpdx
    walterhpdx May 10, 14:06

    Trump won’t be happy until he completely ruins our economy. $38 billion would have put a lot of food on people’s tables, and would have supported our economies – all down the drain because Trump won’t be happy until he dismantles every single thing Obama accomplished.

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