What Will Happen to Iran Air's Contract with Boeing?

Currently, there are conflicting statements regarding the Boeing contract with Iran Air. On one hand, the CEO of Iran Air emphasizes the execution of the contract, while Boeing remains silent. On the other hand, the U.S. government is seeking to disclose the details of the Iran Air-Boeing contract. Farzaneh Sharafbafi, the CEO of Iran Air, stated, "The Office of Foreign Assets Control of the U.S. Treasury has issued a license for the sale of Boeing aircraft to Iran, and if the U.S. exits the JCPOA, this action will not affect the Boeing contract with Iran." In contrast, Boeing officials have remained silent and have resisted providing details about the contract. According to a CNN report, the Trump administration's Justice Department has requested a federal court in Chicago to extend the deadline for evaluating the contract between Boeing and Iran by two months. The Chicago federal court has asked the Trump administration to announce its decision regarding the controversial Boeing deal with Iran, questioning whether Boeing should disclose the details of this deal. Meanwhile, it has been reported that Boeing is even submitting its arguments for keeping its transactions with Iran secret in a sealed manner to the court. During the election campaign, when Airbus had signed a cooperation agreement with Iran Air, Donald Trump criticized why Boeing should not sell planes to Iran. Now, if his administration can prevent the signed contract between Boeing and Iran Air, what will happen? Due to the lack of disclosure of contract details, there is no news on how Iran Air might incur losses and refer to international courts. However, as Boeing has stated, the contract with Iran will create direct and indirect jobs for 100,000 people in the U.S., and over 13,000 parts suppliers in the United States will be involved in this contract. Therefore, canceling this contract could be a blow to Boeing. On the other hand, Airbus may still be able to deliver planes to Iran; if this happens, the U.S. would be handing the market from an American company to a European one. Regarding this issue, Airbus has remained silent, but the ATR company, a subsidiary of Airbus, has responded, likely reflecting Airbus's stance. Milko Rapoli, the sales manager for ATR aircraft, stated in response to the question of what their plan is if the U.S. exits the JCPOA, "From the beginning of the contract, we faced challenges with the U.S. Treasury license, but there are clear parameters that we know how to move forward. The JCPOA has a clear program regarding the U.S. Treasury, and the risks we currently face are similar to the first days of negotiations, but we are confident that we can continue to deliver aircraft as much as possible, with the awareness that we must look at it from various angles despite the decisions of U.S. officials." The ATR sales manager reminded that "we have a license from the U.S. Treasury for sales until 2018, so it is a good opportunity for all aircraft transactions with Iran, and we are doing our utmost to deliver 20 aircraft by the deadline." In Iran, it has been announced that 80 Boeing aircraft have been ordered for Iran Air, 30 for Aseman Airlines, and 10 for Qeshm Air. Out of these 120 aircraft, 90 are Boeing 737 models, with 50 for Iran Air, 30 for Aseman, and 10 for Qeshm Air. Another 30 aircraft are Boeing 777s for Iran Air. But do these models have replacements in Airbus? The Boeing 737 is the best in its class worldwide, but it has a tough competitor in the Airbus A320. Iran Air has currently ordered 46 Airbus A320s, and other Iranian companies have made similar orders to Airbus. Therefore, it can be said that if Iran is deprived of purchasing the 737, it would be like being deprived of buying a Mercedes-Benz, but it might still be able to buy a BMW (Airbus A320). But what can be said about the Boeing 777? Most airlines in the world use the Boeing 777 for their longest flights. The Boeing 777 has a flight range of up to 17,000 kilometers. The diameter of a 777's engine is the same as that of a Boeing 737. The engine of this aircraft is considered one of the strongest passenger aircraft engines in the world. Iran Air has ordered two types of this model, including 15 777-300ERs and 15 777Xs. The first delivery is scheduled for early 2018 with the 777ER model. The 777X model is Boeing's most advanced model, which is still under construction. In this case, the issue may be similar to the 737 model; it is true that the 777 model is the best in its class, but it has a serious competitor, the Airbus A350 series 1000, of which Iran Air has ordered 16 units. Therefore, even if Iran Air's contract with Boeing is canceled, Iran Air still has a replacement model in Airbus. The Airbus A350 series 1000, with its 15,000-kilometer range, allows for non-stop intercontinental flights. But what if we take the worst-case scenario? What if the U.S. ultimately finds a way to revoke the issued licenses? After all, at least 10% of all Airbus aircraft also use American-made parts, which currently have no substitutes. The option that comes to mind is purchasing Russian and Chinese aircraft, but there is a significant problem with buying these aircraft as well. The modern models from these countries also use American parts. One of these aircraft is the Sukhoi Superjet 100. Denis Manturov, the Russian Minister of Industry and Trade, stated, "Among the parts and equipment of the Sukhoi Superjet 100, there are components produced in the U.S., and according to U.S. sanctions, we must obtain permission from the Treasury of that country. We are facing problems selling this aircraft to countries that are under sanctions, including Iran." However, the Russians and Chinese are currently seeking to manufacture substitute parts. One of the main components that is produced by American companies is the engine. However, the Russians have managed to include a Russian-made engine alongside the American engine in the MC-21 model, which competes with the Airbus A320 and Boeing 737. The same has happened with the Chinese COMAC C919 model. Even the Russians and Chinese plan to build their first wide-body aircraft together by 2022. Perhaps by that time, America's dominance over the aircraft market will not be as it is today. Even European companies are implementing similar plans. Nevertheless, if we assume that the Trump administration can prevent the Airbus and Boeing contracts, it will be the biggest gift to Chinese and Russian companies, handing them a market worth over $25 billion, or again, money will flow into the pockets of international brokers to circumvent sanctions and purchase second-hand aircraft.