Boeing’s pending $8 billion deal with Iran Air was uncertain before President Trump’s executive order temporarily barred U.S. travel by Iranian nationals, but the ban adds an immediate logistical barrier and signals further deterioration in the agreement’s prospects.
Boeing’s pending $8 billion deal with Iran Air was already in serious doubt before President Trump’s executive order Friday barred travel to the U.S. by Iranian nationals for the next three months.
The travel ban adds an immediate logistical barrier as pilots, cabin staff and maintenance crews will be unable to enter the U.S. for training on how to fly and safely maintain Boeing airplanes.
More significantly, the relabeling of Iran as a country that’s a source of potential terrorists may signal that the U.S. is likely to pull out of the 2015 nuclear accord, reached by former President Obama, that lifted U.S. sanctions on Iran and gave Boeing its opening in the first place.
Yet as the jet maker tries to avoid getting on the wrong side of the president, Boeing will say very little publicly.
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Adam Pilarski, vice president with industry consulting firm Avitas, said the travel ban could be bypassed if the will were there. If the Trump administration decided it wants Boeing to sell some airplanes and travel was required to make it happen, waivers could be granted, he said.
But that doesn’t seem likely.
“During the election campaign, Trump and a number of people close to him said they hate the Iran nuclear deal,” said Pilarski. “A number of his military advisors have been strongly anti-Iran.”
Richard Aboulafia, aviation analyst with the Teal Group, also doesn’t hold out hope for Boeing’s sales agreement.
“My assumption has been they are going to re-impose sanctions, so it’s probably dead anyway,” he said.
The agreement Boeing announced with Iran Air in December — for 80 aircraft, consisting of 50 single-aisle 737 MAX 8s, 15 large current model 777-300ER widebodies and 15 next generation 777-9X widebodies — was particularly welcomed in Everett, where it would help partially fill a looming gap in 777 production that has already led Boeing to cut the 777 rate.
The deal’s now-doubtful status contrasts with that of a parallel deal also announced in December by European rival Airbus.
The Airbus deal with Iran Air was for 98 aircraft, including 46 single-aisle airplanes and 52 widebody jets, worth about $8.4 billion.
Airbus finalized the deal before year end, and then for good measure rushed to deliver the first airplane to Iran in January, making the deal a fait accompli.
“Airbus was smart,” said Pilarski. “They immediately delivered a plane, so it’s hard to step back.”
Mohammad Yahyavi, an Iranian-born former Boeing vice president who is now retired and living in Bellevue, said he agees with Trump’s moves to restrict immigration and travel from seven named countries, including Iran.
“It’s absolutely necessary that we have secure borders and legal immigration,” Yahyavi said. “He’s making sure we are all safe.”
Yet he acknowledged it leaves Boeing “in a very tough situation.”
“They have a sales commitment and a customer,” Yahyavi said. “On the other hand, they have government policies to obey. I know which will prevail. It’s the government.”
With customers all over the globe and a business fundamentally based on worldwide travel, Boeing has a strongly diverse and internationalist perspective.
Last year, the company offered an internal webcast presentation, strictly non-political, on the ancient history and culture of Iran, according to a person who watched it.
It included a segment on the earliest known declaration of human rights by Cyrus the Great, which was inscribed on a clay cylinder in 539 BCE and freed the slaves of ancient Persia as well as establishing religious freedom and racial equality.
Yet modern theological and sectarian animosities make that ancient history irrelevant today.
Aboulafia said Trump’s view of Iran seems heavily influenced by its Arab neighbor states on the Gulf.
Saudi Arabia, Qatar and the United Arab Emirates, rich countries with deep business ties to the U.S., have largely Sunni Muslim populations and are implacably opposed to the rise of Iran, a Shia Muslim powerhouse. All lobbied hard against Obama’s nuclear accord, as did Israel.
In Iran itself, hardliners in government who oppose detente with the U.S. may also be celebrating Trump’s moves.
Caught in the middle of these political forces, Boeing issued only a minimalist statement Monday in response to media inquiries.
“We’re continuing to assess any impact the executive order might have and are closely monitoring congressional, administration and judicial actions,” a spokesman said.
A current Boeing vice president, who spoke on condition of anonymity because of the sensitivity of the situation, said the company is constrained because it has much more at risk than tech companies like Microsoft — not only the Iran agreement but also the Air Force One contract and multiple defense deals with the government.
“Publicly we don’t want to risk making the situation cloudy,” the executive said. “We have to give it time, and not do anything to jeopardize the relationship. We need to be patient.”
And Trump’s executive order gives Boeing one more headache: another country whose nationals are for now banned from travel to the U.S. is Iraq.
Since 2013, Iraq has taken delivery of 13 Boeing jets. It still has undelivered orders pending for 18 single-aisle 737s and ten 787 Dreamliners.
For now, Iraqis cannot even come to Washington state to pick up those airplanes.