As of the end of 1Q16 there were 1,660 active commercial aircraft in the Middle East.  Of these 270 or 16.3% were based in Iran.  Iran had a total of 324 (active plus inactive) commercial aircraft listed, but many are parked for a lack of spares or being unsafe to fly.

Iran has the second largest commercial aircraft fleet (including parked aircraft) after the UAE.  No wonder the OEMs are so keen to get into that market.  Airbus made a big splash with its $27Bn order.  Everyone has been wondering why Boeing has not also benefited from Iranian interest.  After all, Iran is expected to buy from every OEM in order to minimize its fear of renewed sanctions.  The wider the business interest and fear of economic pain, the higher the hurdle to renew sanctions.

Boeing is as eager as any OEM to get back into the market.  As the table below illustrates, over a fifth of the Boeing fleet in Iran is parked.  As an aside, the Russian aircraft numbers demonstrate growing urgency by UAC to get back in, too.  The Fokker and BAe numbers show the level of opportunity for Bombardier and Embraer.  Iran offers some rich pickings given the order slowdown in the rest of the world.

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Boeing represents as important a supplier as Airbus.  Especially in the widebody segment.  But Iran brings up some special complications for a US-based vendor.

The first is the US Treasury.  This link provides a good introduction on where the department stands.  Within Department of the Treasury’s Office of Foreign Assets Control (OFAC) some more wrinkles emerge.  With so many Iranian banks on the list (U.S. Persons Must Continue to Block the Property and Interests in Property of this Person Pursuant to Executive Order 13599) things become more restricted.  So, for example, if Iran’s Mahan Airlines wants to buy a Boeing, it can’t. There are people (another link) listed that cannot be involved with buying US aircraft for Iranian airlines.

Secondly, as if this isn’t enough, another twist in the story has emerged.  The threat of placing liens will certainly slow things down. The New York Times reports: “About 90 percent of the $1.6 billion in default judgments against no-show defendants including Iran, Syria, North Korea and the militant Palestinian group Hamas have not been paid.” But sometimes this NGO has won and this NGO is not being quixotic.  Others have also won claims against Iran in US courts. Here’s another one.

It’s no wonder the pending deal between Iran and Boeing is taking a while to move forward.

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Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

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