Posted on May 4, 2017
Iran is in talks with Britain’s export credit agency to facilitate the financing of aircraft sales to state airline IranAir as part of its pact with world powers to lift sanctions over its nuclear program, a senior Iranian official said.
IranAir’s plan to buy more than 180 jets from Airbus and Boeing is the most visible economic deal on the table after major powers last year lifted most sanctions on Iran in return for restrictions on its nuclear activities.
But financing for the purchases has been hard to secure because most Western banks are holding back, concerned about the future of the 2015 agreement after US President Donald Trump called it a bad deal and ordered a review.
So far, IranAir has taken delivery of just three Airbus jets, for which it paid cash, industry sources say.
Deputy Roads and Urban Development Minister Asghar Fakhrieh-Kashan said the UK’s export credit arm, UK Export Finance (UKEF), had tentatively offered support for least some Airbus jets built in Britain, France, Germany and Spain. It could also offer some support to Airbus’ US rival, Boeing, he added.
«We have received some offers from UKEF, that is under review by Iran,» Fakhrieh-Kashan told Reuters.
Two aircraft industry sources who asked not to be named also confirmed talks were taking place.
UKEF and both major plane-makers declined to comment.
Countries in parts of the world where banks won’t invest often turn to European and US governments for export credits or loan insurance when they want to buy big-ticket items like aircraft from those countries’ companies.
About 6 percent of aircraft deliveries depend on such support, which removes some but not all of the risks banks face in lending to airlines with poor credit, helping to grease the wheels of trade.
This fallback system has been frozen for more than a year, however, as European agencies demand more controls after Airbus acknowledged making faulty applications for UK aid, triggering a fraud probe, and UKEF’s equivalent in Washington, the Export-Import Bank (EXIM), faced a battle over its future.
US President Donald Trump hinted in his campaign he might get rid of the EXIM Bank, which some conservative members of Congress have argued perpetuates cronyism. He has since talked up the benefits of exports for US jobs and in April nominated a new bank president and a member of the board.