Iran Air embark on buying spree with Airbus

Iran Air embark on buying spree with Airbus

At the end of last week, following the United Nations nuclear inspection breakthrough, sanctions were lifted on Iran, and since, the country’s air transport industry appears poised to enter a period of modernisation and growth.  On 16th January, the European nations and the United States lifted oil and financial sanctions on Iran, and therefore released roughly £69,696,126,000 (approximately $100 billion USD) of its assets, after the international inspectors concluded that the country had followed through on their promises to dismantle large sections of its nuclear program.

On Monday 25th January, Airbus shared that they were in talks with Iran towards to sale of dozens of new commercial aircraft.  Following on from this, on Thursday 28th January Iran Air agreed to acquire aircraft from all of Airbus’ in-production jetliner families.  This will provide the Iranian flag carrier with a modern and highly efficient fleet capable of meeting its air transport needs, covering both regional routes, to long-haul operations.

This shopping spree agreement for 118 new aircraft, including both current engine options (CEO) and the new engine option versions (NEO) included:

  • 21 x A320ceo
  • 24 x A320neo
  • 27 x A330ceo
  • 18 x A330-900neo
  • 16 x A350-1000
  • 12 x A380

The agreement, signed in the presence of presidents Hassan Rouhani of Iran and François Hollande of France at the Elysée Palace, will be worth over $25 billion at the current list prices, and it is believed to be the biggest aircraft order by Iran since the revolution in 1979.  It is also likely that the company will be paying substantially below the catalogue price given the large scale of the order.

This order of 12 x A380 aircraft has also breathed new life into the A380 jet programme, which just 12 months ago has been called into question by the group’s own finance director.  With the world’s largest passenger jet being unsuccessful in securing a new customer in almost three years, and also the current biggest user, Emirates, pushing for more efficient versions of the aircraft (which was originally designed in the 1980s) the future was uncertain for the A380.  Investors had questioned whether Airbus would be able to recover the investment of more than €10 billion spent on development.  Airbus has since pledged to break even on current running costs, and this investment will help secure the future of the world’s largest passenger jet, with the first deliveries starting in 2019.

This deal between Airbus and Iran Air may be only the start of a long line of future orders, as Iran has estimated that it needs at least 500 new aircraft to renew the country’s ageing fleet.  Abbas Akhoundi, Iran’s minister of transportation, explained that as of last week, only 150 out of Iran’s 250 aircraft were operational.  Iranian ministers have also spoken of their ambition to transform Tehran into an aviation hub in the future, however this would required a significant improvement in safety and air traffic control.  Mr Brégier, President and Chief Executive Officer of Airbus, has stated that Airbus would be ready to help Iran in these areas as well in the future.