Boeing defers Iran deliveries, eases output concerns

PARIS (Reuters) - Boeing BA.N has found new homes for jets it hoped to deliver to Iran this year, further clouding the prospect of quick deliveries as U.S. President Donald Trump considers whether to withdraw from a pact to remove nuclear-related sanctions.

FILE PHOTO: Dennis Muilenburg, CEO of The Boeing Company, arrives at Trump Tower in New York City, U.S. January 17, 2017. REUTERS/Stephanie Keith

The head of the U.S. planemaker also signaled on Wednesday that Boeing is no longer as concerned as it once was that a collapse of the deal could force it to cut production of the 777 jetliner, threatening hundreds of jobs, due to a pickup in demand.

“We have no Iranian deliveries that are scheduled or part of the (production) skyline this year, so those have been deferred in line with the U.S. government process,” Boeing Chief Executive Dennis Muilenburg said in a conference call.

“I can tell you with confidence that we have continued to build risk mitigation into our 777 production plan.”

Boeing agreed in December 2016 to sell 80 aircraft to IranAir under a deal between Tehran and major world powers to reopen trade in exchange for curbs on Iran’s nuclear activities.

These included 15 Boeing 777-300ER long-range jets for which Boeing has obtained U.S. export licenses.

Industry sources said Boeing had been tentatively due to send Iran three 777s this year but has reshuffled deliveries with other buyers.

The original deal for 777s threw vital support to one of Boeing’s most profitable jets, which is nearing the end of a decades-long production run pending the switch to a new model.

It has already cut production due to a drop in sales. In late 2016 it told staff the lower output plans took account of Iran, while publicly stressing the value of the deal to jobs.


On Wednesday, however, Muilenburg said Boeing would not have to trim production of the 777 any further even if Iran were unable to take any deliveries of the $347 million jet.

“The production rate that we have put in place is not dependent on the Iranian orders,” he said.

“If those orders do come to fruition, if we do ultimately deliver airplanes, those represent opportunities for us but we are going to follow the U.S. government’s lead and we have ensured that ... we are not dependent on those aircraft.”

Sales of 777s rebounded in 2017, more than doubling to 60.

Trump has often vowed to pull the United States out of the 2015 nuclear pact between Iran and six major powers. He will decide by May 12 whether to restore U.S. economic sanctions on Tehran, which could be a first step to ending the deal.

Iranian officials have said repeatedly the United States must honor the agreement and have accused Washington of hampering not only the delivery of U.S. aircraft, but also European planes purchased under the same accord, because of practical restrictions on financing.

IranAir ordered 100 Airbus jets and 20 Franco-Italian ATR turboprops. It has taken delivery of three Airbus and 8 ATRs.

The European firms rely on U.S. export licenses to complete their deals because of the number of U.S. parts in each plane.

So far Washington has issued licenses covering a period that would allow about a third of the Airbus deliveries to go ahead, but it remains unclear how a U.S. withdrawal would affect these.

Reporting by Tim Hepher, Ankit Ajmera; Editing by Sudip Kar-Gupta and Diane Craft