Will Boeing’s New Deal with Iran Air Go Ahead?
As you’re looking for B2B (business to business) manufacturer stocks in online stock trading, it is essential to keep up with news about any deals struck by these companies with their customers. Orders are essential for manufacturers of high end and exotic products, since they indicate demand which reflects on the stock value. It provides greater motivation for the company and its employees and helps sustain jobs and increase production. And that’s doubly true for the aerospace industry.
Boeing’s New Deal with Iran Air
In what is the first major agreement ever made between an American company and Iran, Boeing ($BA) has secured a deal worth nearly $17 billion that would require it to sell 80 jetliners to the country’s Iran Air. Boeing’s rival and European aircraft manufacturer Airbus ($EADSY) has also planned aircraft sales to Iran Air. The two major aircraft manufacturers in the Western world have marked the first high profile deals struck between the West and Iran since sanctions on Tehran have been removed. Contract talks had begun back in September.
But Boeing’s relationship with president-elect Donald Trump has lately been strained when the latter complained about what it would cost to replace the Air Force One jets that are manufactured by the company. It isn’t clear whether the incoming Trump administration has been informed of the Iran Air deal, and it also isn’t known whether Trump would attempt to slow down or even stop such deals from going ahead.
Boeing to Attempt to Convince Trump
But Boeing has said that the deal could help sustain thousands of jobs in the US. That should probably lead Trump to approve this deal, which would be a very lucrative arrangement for the Chicago-based company. The sustainment of the jobs and livelihoods of employees isn’t a factor that can be ignored. The deal could also help raise the value of $BA stock. Boeing has also mentioned that it is willing to work on the Air Force One cost with Trump.
Since Iran Air is an airline owned by the nation, sales to the airline by an American company need to secure approval from the State Department, US Treasury, and Congress, particularly regarding financial arrangements. That’s why there could be obstacles to this kind of transaction particularly since, for these clearances to come through, Trump needs to be compliant. But he has already expressed displeasure with the Iran nuclear arrangement, and he could be against such commercial deals too.
Massive Deal for Boeing
The Iran Air - Boeing deal involves 15 long-haul 777-300ER jets, 15 777X wide body jets that are still under development, and 50 of the 737 Max single-aisle jets. These deals are essential for $BA to continue the existing rate of production for the 777. There has been a slowdown in the deals signed for the company’s 777-300ER, and more orders are needed for $BA to avoid production cuts.
Overall, Boeing has signed over 5,700 orders worth nearly $500 billion for its jet aircraft. The company is keen not to cede market share in Iran to its rival Airbus, particularly when the country could face rising demand for domestic aircraft as well.
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