Sukhoi is poised to cancel its Superjet order with Iran.  This news follows our recent story about how difficult obtaining and maintaining aircraft is for Iran’s airlines with reintroduced US sanctions.

ATR managed to deliver within the period in which sanctions were eased prior to their re-imposition.  Airbus similarly managed to deliver some used aircraft during that period.  Boeing did not move as quickly, and it turns out that may have been a smart move.  The Iranians are going to struggle for spares. By not exposing itself, Boeing limited its risk.

Doing any business with Iran has to overcome OFAC rules. And as long as an aircraft has 10% or more US-based parts, the OFAC rules won’t allow an export approval.

The statement that a plan was to deliver the SSJ100R (SSJ100 with no western content) version to Iran by 2022, made by Sukhoi Civil Aircraft president Aleksandr Rubtsov after the contract signing ceremony in April, now looks awkward. Here’s why. UAC should own the Iranian market.  They should have planned to deliver the SSJ100R earlier than 2022.  The writing was on the wall as soon as the 2016 election results were out.

Why UAC could not move SSJs into Iran before the re-imposition of sanctions is an open question – in retrospect, UAC can claim to be following Boeing to minimize risk. But that isn’t a plausible argument since UAC wants to grow its global footprint.

If UAC were to argue they didn’t have available production, which is more plausible, this sends a signal too. UAC could (should) have moved to exploit the Iran Aviation Industries Organization, which owns Iran Aircraft Manufacturing Industrial Company.  These organizations are masters of reverse-engineering. Iran’s fledgling aerospace sector has proven to be remarkably resilient.  Iran’s F-14s date from the mid-1970s and yet they are still deadly.  Iran’s airlines have not been beneficiaries of state support like the military.  But these airlines have managed to acquire 737s, MD-80s, A320s, and A340s and keep them flying.

Iran’s airline market may be the largest place to sell aircraft at present – Iran could probably take more aircraft than China in the near term. CH-Aviation lists 181 active commercial aircraft in Iran among 23 airlines. These airlines also have another 111 parked aircraft – likely those in need of spares or acting as a source of spares.

The Bottom Line
This should be UAC’s market for the taking.  The US, Canada, Brazil, Europe, and China cannot deliver to Iran.  That leaves Russia as the only possible source for new aircraft. The highest priority for UAC should be delivering the SSJ100R and an equivalent version of the MC-21 to Iran, as they probably could sell 300 plus aircraft and build the financial success of both programs.

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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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