Russia’s Transport Minister Maxim Sokolovhas said that Russia and Iran are holding talks over Russia supplying Iran with Sukhoi Superjets.

The SSJ seats 108 and could be defined as a large regional jet.  It appears Iran has 66 aircraft of this size in service plus another five parked as of the end of the first quarter 2015.  Iran previously announced an order for 20 AN-148s which seats 70 in two class configuration.

The announcement today could be seen as a first move by the Russian government to ensure its aircraft get in quickly for what is expected to be significant orders from Iranian airlines.  Bloomberg reports, quoting the Islamic Republic News Agency,  that Iran needs about 400 passenger planes to modernize its fleets, which would cost $20 billion, Abbas Akhoundi, Iran’s Roads and Transport Minister, said at the Paris Air Show.

Since Russia has a strong relationship with Iran that remained intact throughout the sanctions period, it may have an advantage in terms of these smaller aircraft.  Even an order for 30 Superjets would be a big win for the Russians.  However the big money will be for the bigger aircraft which Airbus and Boeing will dominate.  That said, Airbus and Boeing will be hard pressed to deliver anything to Iran’s airlines any time soon. Leasing firms on the other hand could benefit even offering relatively current aircraft.

The move by Russia’s government is timely as Sukhoi could likely deliver.  But we expect the Iranians are also speaking with Embraer and Bombardier about the same size aircraft.  They need to do this to extract competitive pricing.  It will be interesting to see how long it takes for Iran to access the funds it needs and how soon it will deploy those funds to airline fleet renewals.  The pent up demand is on both sides – sellers and buyers.

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