Iran Faces Financial Hurdles for Airbus Orders
Banks ‘shy’ of funding big deals with Tehran, says Airbus sales chief
DUBLIN—Concerns in the financial community about doing deals in Iran are hampering
Airbus Group SE ’s ability to close a multibillion-dollar aircraft deal with Tehran, the European plane maker’s head of sales said Wednesday.
“We have to find ways to get money out of Iran through the banking system,” said John Leahy, Airbus Chief Operating Officer for customers. While progress has been made, it has been slower than expected, Mr. Leahy said.
Banks remain reluctant to do deals now that the U.S. and European governments are looking to foster transactions, after facing fines imposed by U.S. regulators on lenders with Iran dealings when western sanctions were in place.
“They are all very shy,” Mr. Leahy said.
Iran, with a population of more than 80 million and
pent-up demand for travel after years of isolation, represents one of the few large remaining untapped markets for new planes. Mr. Leahy said Iran has “an ancient fleet” that needs replacing and will enjoy growth as the country’s economy recovers.
IranAir Chief Executive Farhad Parvaresh acknowledged that the banking issue is one of the biggest hurdles to closing plane deals.
The airline is also in talks
Boeing Co.
, the world’s largest plane maker by deliveries, about
a potential order. IranAir has now
met twice with the U.S. company and talks are progressing, Mr. Parvaresh said in an interview with The Wall Street Journal. He wouldn't say when a deal might be sealed.
The banking issue goes beyond the airplane sector. Oil companies also have struggled to line up big banks to back deals. They have, in some cases, had to resort to barter arrangements or using smaller banks.
That is a system also working for plane makers. Franco-Italian turboprop maker ATR is putting together to a mix of banks and lessors to help finance the euro-denominated sale of
40 of its planes to Iran, the plane maker’s Chief Executive Patrick de Castelbajac said. The company hopes to deliver the first of its regional planes by the end of the year.
The Airbus deal is far larger, though, making it more difficult to work without big financial institutions. Iran announced a deal to buy 118 airliners from Airbus valued at $27 billion at list price. The deal, which hasn’t been completed yet, includes everything from Airbus single-aisle planes to 12 of its flagship A380 superjumbos, which carry a list price of $432.6 million, though buyers typically get discounts.
Airbus sales chief John Leahy, pictured at a press conference in Paris in January, said on Wednesday that financing problems are complicating IranAir’s attempts to upgrade its fleet of aircraft. Photo: Bloomberg News
“If you don’t sort it out, there aren’t going to be any deals done,” Mr. Leahy said.
The delay is limiting Airbus’s ability to quickly satisfy some of IranAir’s most immediate demands, Mr. Leahy indicated. Though planes are
available for delivery, the number has dwindled.
The reluctance of bankers isn’t the only obstacle to completing agreements for jetliner sales. Airbus and others are still waiting approval to sell their planes from the U.S. Treasury’s Office of Foreign Assets Control. Mr. de Castalbajac said a decision was expected months ago. The U.S. government is facing a flood of license applications, not just for aircraft deals, he said.
Airbus commercial airplane boss Fabrice Brégier Tuesday said the company was making progress securing the export licenses for the deal, but that more work needed to be done. He remained optimistic the deal would be completed this year.
IranAir’s Mr. Parvaresh said he was hopeful that once the export licenses are issued, banks would feel more comfortable financing such deals.
----------
Leahy Urges Quick Resolution of Iran Banking Issues
Jun 1, 2016
Jens Flottau | Aviation Daily
Stefano Ciccarelli
DUBLIN—
Airbus sales chief John Leahy has warned that delays in setting up a secure system of money transfers in and out of Iran could jeopardize orders from the country.
“We have to have a reliable international banking system,” he told Aviation Daily at the
IATA annual general meeting here. The issues “need to be sorted out in the next few months, otherwise there will be no deals,” he said.
Some international sanctions against Iran were lifted earlier this year. But banks have been extremely cautious in reinstating business links with Iran, because of the risk of noncompliance with residual sanctions. “The banks are very shy, but we have to work this out,” Leahy said.
Airbus in January became the first Western aircraft manufacturer to sign a preliminary agreement with Iran Air, covering a total of 21
A320ceos; 24
A320neos; 27
A330ceos; 18 A330-900s; and 12
A380s. Since then, there has been little movement. The manufacturer has revised downward its estimate about how many aircraft it can deliver to Iran in 2016 because of the delays. Leahy said the situation is “becoming more and more difficult.” Airbus would have “a few aircraft available on the ramp” that it could allocate to Iran Air once the situation has been sorted out, he added.
--------
situation is becoming more and more difficult! That's no problem, Mr Rohani and Zarif will call him the liar, idiot, uneducated, unaware, etc, and then they will show the swift room to reporters once again and everything will be solved.
, as if fat Arabs dictators are dictating the policies and not the otherwise!
