Trump Administration Orders Boeing To Cancel Deal With Iran
MARY LOUISE KELLY, HOST:
Well, one consequence of President Trump's decision to pull out of that Iran nuclear deal means that one U.S. company could lose billions in potential sales. Boeing had deals worth about $20 billion with two Iranian airlines. Now the White House is revoking Boeing's export licenses. NPR's Jackie Northam reports.
JACKIE NORTHAM, BYLINE: Boeing announced its two deals with Iran airlines in late 2016 and early 2017, about a year after the deal that gave Iran relief from some sanctions in exchange for its nuclear program, the deal Trump took the U.S. out of yesterday. The agreements were for about 110 narrow-body 737s and wide-body 777 aircraft. The first was to be delivered this year.
There was great fanfare over the announcements of both deals. But there was also uncertainty they would ever be completed.
FARHAD ALAVI: A lot of these agreements were memorandum of understanding, and there were tentative.
NORTHAM: Farhad Alavi is a trade sanctions lawyer with the Akrivis Law Group. He says the Obama administration made clear there were situations and scenarios where the nuclear deal could disappear.
ALAVI: That was the message that was sent to these companies early on during the Obama administration, that there was a chance that, you know, things could change. And businesses were encouraged - if not explicitly, implicitly - to incorporate that in their business planning.
NORTHAM: Boeing must have taken those warnings to heart, says Richard Aboulafia, an aviation analyst at the Teal Group, an aerospace consultancy. He says Boeing has not only not delivered any of the aircraft from either deal with Iranian airlines, they weren't even shown as firm orders on its website.
RICHARD ABOULAFIA: I think there were real doubts about the market, both in terms of whether it could pay for these planes and the likelihood of the political arrangement staying in place. You know, finance was a very big concern. Their terms and financing weren't going to be great, wasn't really clear where the money would come from. So they were sort of likely, nice to happen, almost aspirational orders but never firm orders.
NORTHAM: Boeing chief executive Dennis Muilenburg told a lunch crowd at the Economic Club in Washington today that the loss of aircraft sales following the decision to pull out of the nuclear deal probably won't hurt the company. Muilenburg says he believes and hopes Boeing's fierce rival Airbus will also be subject to the same licensing agreements.
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DENNIS MUILENBURG: It's very important to us from a U.S. government standpoint that the outcome in Iran is a level playing field between us and Airbus. We need equal treatment.
NORTHAM: The Toulouse, France-based Airbus was able to make deals with Iranian airlines before Boeing and has already delivered three aircraft. Sanctions lawyer Alavi says it's likely Airbus will not be able to fulfill its order of a hundred passenger jets. Even though Airbus is not an American company, many components of its planes are made in the U.S.
ALAVI: A lot of these technologies are considered sensitive. And therefore, wherever they are located around the world, they are still subject to U.S. laws. Therefore, because these items are uniquely American, this effectively prevents companies like Airbus from continuing forward with their sales to the Iranians.
NORTHAM: Both Boeing and Airbus say they are evaluating what the next steps may be and will follow the U.S. government's lead.
Jackie Northam, NPR News, Washington.
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