As tensions with Iran increase under President Donald Trump, the future of Boeing’s $8 billion deal with Iran Air lingers in limbo.
New sanctions imposed by the Trump administration on Friday don’t directly impact the pending sale, but they do represent the White House’s shift away from the Iran nuclear deal, which lifted sanctions and allowed Boeing’s negotiations to move ahead under President Barack Obama.
Boeing announced the sale of 80 aircraft to Iran Air in December, saying it coordinated closely with the U.S. government to ensure the agreement went through.The total list price of the planes is $16.6 billion, but Iran said the actual price came to about half that amount.
In the news release announcing the sale, Boeing spoke to Trump’s concerns about jobs. The company said the agreement would “support tens of thousands of U.S. jobs directly associated with production and delivery of the 777-300ERs and nearly 100,000 U.S. jobs in the U.S. aerospace value stream for the full course of deliveries.”
The jobs angle doesn’t seem to have done much to protect the deal, however. Analysts say it’s unlikely to go through.
“I just regard them [Boeing] as doomed, the deal is doomed,” said aviation analyst Richard Aboulafia of the Teal Group. “This administration seems to want sanctions back in place and tensions renewed, and that’s not a recipe for a jetliner deal being done.”
Boeing has remained quiet on recent actions Trump has taken against Iran, including blocking immigration from the country under an executive order aimed at securing U.S. borders. While companies such as Amazon, Microsoft and Expedia filed briefs in support of Washington state’s challenge to the immigration ban, Boeing has refused to comment.
When asked whether the most recently announced financial sanctions could affect the Iran Air deal, a Boeing spokesman said the company will proceed with sale arrangements under its current license from the U.S. Treasury Department. “Should we receive new guidance from the Treasury Department, we will act accordingly,” spokesman Tim Neale said in an email.
Among the issues yet to be resolved are the financial arrangements for the purchase, and the prospect of future congressional action. House Republicans have already introduced legislation that could raise new hurdles for the sale. Assuming that all the hurdles can be overcome, the first Boeing jets would be delivered next year.
Meanwhile, Boeing’s European archrival, Airbus, last month delivered the first of 100 jets to Iran Air under the terms of a separate multibillion-dollar agreement.
Aboulafia speculated that Boeing’s business priorities may be a factor behind the company’s reluctance to comment on the president’s recent actions. “They fight their battles carefully, and probably their highest priority right now is doing what they can do with China,” Aboulafia said.
President Trump has proposed a 45 percent tariff on imports from China, which some fear could start a trade war. Boeing is the largest exporter in the U.S. and would probably be among the companies hurt the most in such a fight.
In a September report, the company estimated that China will need 6,810 new planes worth $1.025 trillion over the next 20 years, which would make China its largest commercial airplane customer. China has threatened to shift contracts to Airbus in the event of a trade war..
Boeing remained mum on Trump’s tariff threats during his candidacy, but did promote trade relations with China in the September report.
“The company is recognized as an industry leader in supporting a strong and robust U.S.-China trade relationship and remains committed to demonstrating the value of bilateral trade and advocating its continued growth,” the report said.