Boeing Co (NYSE:BA) has inked a deal to sell several aircrafts to Iran. The company isn’t discussing the details of the agreement, but an official of the Iranian government has said the deal could be valued at $25 billion. Iran is trying to modernize its fleet of aircrafts after some of the trade sanctions it faced were relaxed.
The $25 billion airplane sales agreement that Boeing Co (NYSE:BA) has signed with Tehran is for the supply of jetliners for the government-backed carrier Iran Air. That comes after several Iranian airlines recently indicated that they wanted to update their fleets with both medium-haul and long-haul jets.
But it is said that completing a transaction with Iran could take Boeing months. One of the potential causes of delays in closing a deal with Iran is that the U.S. government must sign off on the sales of aircrafts to the country. But with the looming presidential elections and simmering politics in Washington D.C., signing off an Iranian multibillion dollar deal could delay even further.
The other reason that could hold back Boeing Co (NYSE:BA) from closing the aircraft supply deal with Iran is financing. Given the strain in the financial sector generated by fallout in the oil market, there is a cloud of uncertainty about lenders who would be ready to fund the transaction.
A promising market
Despite the uncertainties such as U.S. government approval of the deal and financing of the transaction, Boeing Co (NYSE:BA) sees a promising market in Iran. The years of trade sanctions left Iran to rely on aging fleet of aircrafts to serve the international and regional markets. But the easing of the sanctions now paves the way for the company to modernize its commercial aircrafts and that is a boon for plane makers such as Boeing.
However, Boeing will have to vigorously fight for space in the Iranian air budget given that Airbus is also on the brink of a closing a $27 billion aircraft supply deal with Iran.