UPDATE 2-Iran completes long-awaited ATR turboprop aircraft deal

* IranAir already has deals with Boeing, Airbus

* Talks required navigating U.S. sanctions still in place

* First ATR could be delivered in days (Adds background, details, deputy minister interview)

PARIS, April 13 (Reuters) - Iran secured a contract with a third Western aircraft supplier on Thursday since the easing of sanctions by completing a deal to buy 20 regional turboprops from Europe’s ATR, part of an effort to modernise the nation’s creaking fleet.

After months of talks that required navigating a way through separate U.S. sanctions and regulations still in place, ATR and Iranian officials said the contract with national carrier IranAir was signed in Tehran.

Iran initially announced the signing on Monday, but ATR said at the time elements were still being finalised.

The first plane in the deal may be dispatched in days from the ATR factory in Toulouse, France, where it has been sitting for months. It will be joined in coming weeks by three further aircraft already painted in IranAir colours.

Jointly owned by Airbus and Italian company Leonardo, ATR said the deal was worth $536 million at list prices and included options for a further 20 aircraft. Commercial aircraft are typically sold at a discount.

It follows deals between IranAir and plane giants Airbus and Boeing for 180 passenger jets, the first three of which - built at Airbus factories in Europe - have already been in delivered.

Iran wants to reopen for business after decades of sanctions. Under a 2015 agreement between Tehran and world powers, Iran secured an easing of sanctions in exchange for curbs on its nuclear technology programme.

The 70-seat ATRs are expected to serve secondary cities inside Iran, as the government of President Hassan Rouhani showcases the results of the nuclear deal in traditionally hardline voting areas before a May presidential election.

Hardline Iranian media and some prominent hardline figures have criticised the plane deals as a waste of resources at a time of continued hardship for many Iranians.


Rouhani, who is expected to seek re-election, has also faced criticism about the pace of economic recovery from Supreme Leader Ayatollah Ali Khamenei and his hardline allies, who want to regain the presidency in May.

Iran’s fleet renewal continues to be hampered by the reluctance of many Western banks to take part because of U.S. funding restrictions that are not covered by the nuclear deal.

Deputy Roads and Urban Development Minister Asghar Fakhrieh-Kashan told Reuters by telephone that Iran was making progress in lining up long-term finance.

Industry sources said potential financiers for Iran’s aircraft deals included UAE-based leasing company Dubai Aerospace. They also said Iran had held talks with European and Chinese companies.

Iran was paying cash for its first few aircraft but these payments would be considered deposits for future deliveries once financing was in place, Fakhrieh-Kashan said, adding that ATR had offered to finance eight planes if other funding was not found.

The deal was finalised after a hitch caused by uncertainty about whether engine maker Pratt & Whitney Canada, a unit of U.S. firm United Technologies, needed separate U.S. export licences to provide spares and long-term maintenance.

ATR agreed to provide support until the issue was resolved, Iranian officials said. Pratt & Whitney Canada declined to comment. (Editing by Sudip Kar-Gupta and Edmund Blair)