Saturday, 16 January, 2016

Airbus poised to re-enter Iranian passenger jet market

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Airbus is poised to re-enter the Iranian aircraft market as the international community prepares to lift sanctions that have paralysed the country’s economy.

Fabrice Brégier, head of Airbus’s passenger jet unit, said the company had an understanding of future aircraft needs from Iranian airlines and officials, thanks to its existing business supplying certain parts and safety services.

“We have made some contacts, yes,” he said in an interview with the Financial Times. “This is potentially a huge market for Airbus and our competitors.”

However, he stressed that commercial discussions had not yet begun as western companies were banned from such talks until a landmark nuclear agreement between big powers and Iran was implemented. This was expected in the next few weeks, paving the way to a lifting of Iranian sanctions.

“We are dependent on the resolution of the international negotiations,” said Mr Brégier. “[After that] we would have no reason not to consider Iranian airlines as a normal customer like the rest of the world. We are very strict at applying all the international rules and regulations.”

Airbus and Boeing have been allowed under the existing sanctions regime to provide spare parts and safety manuals to Iran’s ageing fleet, which was on average 25 years old, said Mr Brégier. “We have contacts to support this fleet and we try to understand better what would be the requirements of these customers in the future,” he added.

Boeing is understood to be equally keen to tap into what promises to be a lucrative aircraft market. But it is not yet clear if Iran with its cash-strapped economy and highly indebted domestic airlines will be able to buy up to 500 aircraft that the country has said it needs to renovate its fleet.

Abbas Akhoundi, Iran’s minister of roads and urban development, said in November that the country could not afford an estimated cost of $50bn for new aircraft, which might make leasing jets a more reasonable proposition.

Iran’s civil aviation industry has been subject to sanctions since the 1990s, when Washington blocked Tehran from buying passenger jets, most spare parts or maintenance contracts, apparently to prevent it from gaining access to technology that could have a military use.

Many Iranians are anxiously waiting to see new Airbus and Boeing aircraft, because about 1,200 people have died in plane crashes since 1980.

“Airbus is keen to enter Iran’s market immediately after sanctions are lifted,” said an Iranian businessman. “It will take some time for Boeing, which is also keen, but needs to first resolve its problems with financing and continuation of the US sanctions.”

Iran finalised its nuclear agreement with big powers last summer, in a deal that should result in the lifting of sanctions.

However, European officials have expressed worries that their companies could still be in breach of residual US sanctions if they started doing business in Iran.

France has been keen to tap into the Iranian market and led a big business delegation to Tehran last year. Companies including PSA Peugeot Citroën, Total and Renault have publicly voiced ambitions to return to Iran.

Source: FT

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