Boeing Moves Ahead on Delivering First Jets to Iran Next Year

(Bloomberg) -- Boeing Co. is making “steady progress” to complete the terms of an 80-jetliner sale to Iran Air and expects to deliver the initial planes next year, the first U.S. aircraft exports to Iran since the country's revolution in 1979.

“That remains on track,” Chief Executive Officer Dennis Muilenburg told reporters Monday following the planemaker's annual general meeting in Chicago. “It's really important that at every step of the process, we're working on this hand-in-hand with the U.S. government.”

The $16.6 billion deal with Iran Air and a separate $3 billion agreement with Iran Aseman Airlines bring two of President Donald Trump's initiatives into conflict: his campaign vows to “get tough” on Iran and his promise to bolster U.S. exports supporting thousands of manufacturing jobs. Airbus SE, Boeing's European rival, already has delivered the initial planes in a $19 billion sale struck last year after a nuclear accord with Iran lifted some international restrictions on trade with the country.

The prospect of renewed aircraft deliveries to the Islamic republic continues to rankle conservatives, who say the jetliners will be used for military purposes or to support terrorist groups. The U.S. House voted last year to block financing for aircraft sales to the Iran, and Senator Marco Rubio and U.S. Representative Peter Roskam, both Republicans, have called on Trump to intervene.

“Boeing's deals with Iranian airlines seem incompatible” with the company's mission of protecting American values, said David Almasi, vice president at the National Center for Public Research, a conservative think tank, said at the annual meeting.

Bostering the 777

The Iran Air transaction would provide a crucial sales boost for Boeing's 777 as sales slow for long-range jetliners and customers wait for an upgraded model that is expected to enter the market in 2020. Boeing has 124 unfilled orders for the current generation 777, the company's largest twin-engine jet. The 15 aircraft ordered by Iran Air would give assurance that production runs smoothly in 2018 and 2019.

“We've gone through the licensing process,” Muilenburg said. The company is “working the financing structure.”

If the Iran Air aircraft are added to the backlog, Boeing's production would be 90 percent sold out for the next two years, Muilenburg said. That would lower the risk of a third production slowdown -- and of potential layoffs.

The company has booked nine orders for the 777 this year and has additional sales campaigns under way, Muilenburg said. “I'm bullish about the prospects for the 777.”

To contact the reporter on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net.

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Tony Robinson, Bruce Rule