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Iran and Boeing (BA) Make Jet Sale Deal Official

Boeing BA officially announced that it has signed a tentative agreement with Iran to sell a number of jet aircraft to the country. Originally leaked by an Iranian minister last week, the deal now looks to be one of the biggest between Iran and a U.S. company since several trade sanctions were lifted earlier this year.

"Boeing confirms the signing of a Memorandum of Agreement (MOA) with Iran Air, expressing the airline's intent to purchase Boeing commercial passenger airplanes," said the Chicago-based plane maker.

The state-owned Iran Air fleet is in desperate need of new aircraft, as new American planes have not flown over the country since the 1979 Islamic Revolution. Boeing has not yet released the full details of the agreement, but Iran's minister of roads and urban development said last week that the pact will be for more than 100 planes. He later added to that statement on Tuesday and said that the deal could be worth up to $25 billion.

Despite the Obama administration's lifting of sanctions that came with the U.S.'s new nuclear deal with Iran, a major deal like this is still subject to regulatory approval. Considering how polarizing the nuclear deal was, the agreement between Iran and Boeing will almost certainly be fighting an uphill battle.

In fact, last week two Congressmen, Jeb Hensarling (R., Texas) and Peter Roskam (R., Ill.) penned an open letter to Boeing to express concern with the potential deal. The Congressmen requested further information to assess the national security implications of such a deal, accusing Iran of supporting hostile actors in the region.

Nevertheless, it is important to remember that part of the original purpose of the Iran nuclear deal was to reinvigorate the economic relationship between the U.S. and Tehran. The Obama administration has stated clearly that it will not stand in the way of legal business activity.

"I would remind you that… we issued a statement of licensing policy that allowed for case-by-case licensing of individuals and entities seeking to export, re-export, sell, lease, or transfer to Iran commercial passenger aircraft and associated parts and services exclusively for commercial passenger aviation," said State Department spokesperson John Kirby last week.

From an investor's perspective, a massive contract with Iran is certainly exciting news to hear from Boeing. Not only is this deal expected to be worth many billions of dollars, but it could open the door for a long-term relationship that continues to pay off.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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