Military

With Iran Sanctions Gone, Airbus Expects Huge Order

Paul Ausick

Published: January 17, 2016 9:16 am

Last Updated: January 13, 2020 2:56 pm

Now that the International Atomic Energy Agency (IAEA) has confirmed that Iran has completed the “preparatory steps” that lead to the lifting of economic sanctions against the country, there are likely to be some major economic impacts on other countries and businesses. One business that could be a big loser is the oil industry, while a big winner now appears to be Airbus Group SE and, potentially, The Boeing Co. (NYSE: BA).

The Middle East oil industry is taking a few hits Sunday morning on an Iranian announcement that it plans to raise production by about 1.5 million barrels a day to 4.2 million barrels by the end of this year according to a report at CNN. This is not exactly new news, and we would have expected that the increase was already priced in.

Iran has been barred from buying new aircraft from Western makers since the 1970s, and demand for new planes could be as high as 500 planes at a rate of 50 planes a year for a decade.

The expected deal with Airbus has been in the making for some time, and Iran’s transportation minister said on Saturday that the country’s flag carrier, Iran Air, will buy 114 Airbus passenger jets as it sets out to upgrade a fleet of 45 planes with an average age of 26.8 years. According to a report from Bloomberg, the airline will acquire new and used A320s and out-of-production A340s with first deliveries as early as July.

Iran Air currently flies 13 Airbus A300s, 2 A310s, and 6 A320-200s. None is less than 20 years old, way past retirement age for a modern passenger fleet, according to Planespotters.

The airline also includes 6 Boeing 747s in its fleet and the average age of the 4 747-200s is 35 years and the average age of the 2 747SPs is 37.7 years. An Iranian official noted that the airline is considering adding Boeing 737s and 777s to its fleet.