Boeing, Airbus orders worth $US40bn caught up in Trump move

Boeing, Airbus orders worth $US40bn caught up in Trump move

Boeing, Airbus orders worth $US40bn caught up in Trump move

(BA) is facing a potential loss of $20 billion in sales agreements that it has with Iranian airlines.

President Trump has called the deal "defective at its core", claiming that it is not enough to prevent the creation of an Iranian nuclear bomb, despite the reduction of Iran's uranium stockpile by 98% and mandatory access for independent worldwide bodies to inspect nuclear facilities.

"Following today's announcement, we will consult with the U.S. government on next steps", said Gordon Johndroe, a vice president of government operations communications.

"We have no Iranian deliveries that are scheduled or a part of the skyline this year, so those have been deferred in line with the USA government processes", Boeing CEO Dennis Muilenburg told investors April 25.

European airplane maker Airbus was among the early beneficiaries and seized the opportunity to strike a 22.8 billion euros (US$25 billion) deal for 118 new aircraft to Iran in late January 2016, along with involvement in other operational and support activities locally.

At list prices, those are valued at just shy of $20billion. Following the Syria strike Boeing, Lockheed Martin, Northrop Grumman and aerospace firm General Dynamics gained almost $5 billion in market value despite the wider market slumping.

Boeing chief executive Dennis Muilenburg said last month the company has delayed deliveries of 777 planes to Iran amid the Trump administration's reconsideration of the nuclear deal.

But Muilenburg said the production rate the company had put in place was not dependent on the Iranian orders. It has delivered three planes so far which is the first new aircraft acquired by Iran in past 23 years. It's unclear if that deal will be revoked as well. President Donald Trump announced on Tuesday he was pulling his country out of the 2015 accord, and his administration said it would revoke export licences needed by planemakers to sell commercial planes - which require US components - to Iran.

"We will consult with the USA government on next steps".

Finally, addressing the underlying futility of the sanctions, the head of MENA research at MUFG Bank, Ehsan Khoman, said that China, India, Russia and Turkey will likely oppose US sanctions and keep current levels of Iranian crude purchases, even as the occasional USA allies - including Japan and South Korea - may comply with USA sanctions because of concerns they could lose US security umbrella against North Korea. However, it faces potentially costly industrial decisions over the rest of the 20-plane deal.

One sign pointing to fact that it may be, is that Mnuchin claims the hiatus before enforcing compliance is to buy time for allies to exit deals with Iran.

"Airbus is likely to take greater market share in Iran over the long run", Ferguson wrote Tuesday.

Multinational companies that have made big bets on Iran, from carmakers to oil companies, are examining Mr Trump's decision to reinstate sanctions while trying to find ways to continue with their business interests in the Islamic republic, possibly by obtaining exemptions or waivers. "Iran probably feels more comfortable trading with Europe". The U.N. nuclear watchdog agency has said Iran has not violated provisions of the accord. If Airbus wants to keep selling planes into the world's biggest aviation market, that deal - along with a similar-sized order for Boeing planes - looks dead.

And while new contracts are re-banned, companies and banks will have 90 days or 180 days to wind down their ties before risking penalties.

"From now on, this is an agreement between Iran and five countries", he said on TV.

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