Iran has reached a deal with the American aerospace giant Boeing (NYSE:BA) under which the country will buy 100 commercial planes to renew its aged fleet, as per media reports this Sunday. However, this agreement still requires approval from the U.S. Treasury authorities, according to the head of Iran's Civil Aviation Organization, Ali Abedzadeh.
Deal Value
Though not yet final, the deal is expected to be valued at $17 billion with more details to be revealed following further negotiations. Abedzadeh said that Boeing had submitted an official request to the U.S. Treasury for the sale approval and "the final contract is to be signed between the two sides after the license has been obtained."
He further added that Iran has 250 planes, out of which 230 needs to be replaced. He highlighted the fact that there could be no precise timeline for the contract without the U.S. Treasury’s permission.
Since January, Iran has ordered about 200 planes from three Western plane makers after economic sanctions were eased following a deal on Tehran's nuclear program last year.
As of now, Boeing has been granted permission only to show its products to Iran Air and a few other airlines as it tries to get closer to its European rival Airbus (OTC:EADSY) , which won a major contract from Iran Air in January for 118 jets worth $27 billion.
Iran Air Revamp Mission
Although the potential Iran Air-Boeing deal is supposedly “not bigger than Airbus,” the airline expects to renovate around 85% of its fleet by the next 10 years and will require at least 250–300 new commercial passenger aircraft for that purpose.
The country’s flag carrier airline is also in talks for potential orders with a number of other global aviation companies like Bombardier Inc. (OTC:BDRBF) and Embraer SA (NYSE:ERJ) .
Boeing currently has a Zacks Rank #3 (Hold).
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