Boeing nears landmark deal to sell planes to Iran Air

NEW YORK: US aerospace giant Boeing and Iran Air confirmed Tuesday a tentative deal for the sale of passenger planes, in what could prove a landmark for easing in the difficult US-Iran relationship.

The deal, valued as much as $25 billion, would be the largest between a US business and Iran since the 1979 Islamic revolution.

Boeing said it had reached a preliminary agreement with the state-owned carrier as it seeks to check the boxes in a multi-step process overseen at every stage by US regulators.

"Boeing confirms the signing of a Memorandum of Agreement (MOA) with Iran Air expressing the airline's intent to purchase Boeing commercial passenger airplanes," the Chicago-based company said in an email to AFP.

Boeing said "it will continue to follow the lead of the US government" and that "any and all contracts with Iran's airlines will be contingent upon US government approval."

Earlier Tuesday, Iran Air said it had struck an initial deal to buy Boeing 737 and 777 airliners, subject to US government approval.

The order could be valued at roughly $25 billion, a person close to the situation told AFP.

Despite the significant progress, analysts noted that there are still hurdles to clear before Boeing seals the transaction.

Iran had been an international pariah prior to the Iran nuclear deal reached in 2015 and the US-Iran relationship remains one of mutual distrust, with the US maintaining extensive sanctions on Iran.

Boeing archrival Airbus in January reached a deal to sell Iran 118 aircraft worth about $25 billion. French officials in April said the transaction was in the final stages of winning approval from the US Office of Foreign Assets Control, a key hurdle, because some of the aircraft components are made in the US. The deal still has not been finalized.

In Boeing's case, there are also questions about how Iran Air will pay for the planes given that US banks are still barred from doing business in Iran and from processing dollar-based transactions for Iran.

"If the deal can be consummated in euros, I think it will be a slam dunk," said Cliff Kupchan, an analyst at Eurasia Group.

Kupchan said many Iran-watchers have been surprised by the reluctance of risk-adverse European banks to jump into Iran.

"The payment needs to be ironed out by banking experts," he said.

It is also not certain that Iran's supreme leader Ayatollah Ali Khamenei will approve the purchase.