Iran sealed a deal for more than 100 Airbus Group SE jetliners to upgrade its aging fleet and secured an accord with PSA Peugeot Citroen for the modernization of a Tehran car plant as President Hassan Rouhani’s post-sanctions European shopping trip reached Paris.
Rouhani, who earlier this week concluded 20 billion euros ($22 billion) of transactions in Italy during his first major foreign visit after the lifting of trade sanctions, signed off on the agreements in a ceremony at the Elysee Palace, official residence of his French counterpart Francois Hollande.
Rouhani is in Europe after a landmark nuclear deal signed with world powers entered force this month, lifting sanctions that have starved Iran’s $400 billion economy of investment and consumer goods. Iran’s central bank Governor Valiollah Seif said in an interview last week that the accord may trigger $50 billion a year in foreign investment.
Airport Plans
Among other deals announced in the French capital, Aeroports de Paris and Bouygues SA will assist in the construction of a new terminal at Tehran’s main Imam Khomeiny hub and Vinci SA signed an outline agreement to run and renovate airports at Mashhad and Ispahan.
The Airbus deal covers 118 commercial aircraft, four more than flagged by Iran on Jan. 17, when it said the requirement would comprise a mix of planes including new A320-series narrow-bodies and out-of-production, four-engine A340s to fulfill short-tern needs.
While the older jets are less fuel efficient than new models, they still offer a step up from retirement-age models Iran has kept in service because of its inability to source new ones, contributing to one of the world’s poorest air-safety records. The country’s passenger fleet averages 26.8 years of age, according to website Planespotters.net.
A Franco-Iranian statement on business deals signed in Paris didn’t provide a breakdown of the Airbus models Iran is ordering. State-owned Iran Air’s chairman, Farhad Parvaresh, has said that the manufacturer’s flagship A380 superjumbo might be on its shopping list.
Auto Deal
Airbus may also be in the running for follow-on orders that could include its newest A320neo, A330neo and A350 models, with Iran having said that it will conduct an evaluation of longer-term needs that might also include rival Boeing Co.’s best-selling 737 and 777 types.
Peugeot and long-time local ally Iran Khodro will invest 400 million euros over five years upgrading their auto plant near Tehran in what the French carmaker said is the first industrial accord signed by a Western company since sanctions were removed.
The venture will produce 100,000 vehicles a year starting in late 2017, with output eventually doubling. The revamped factory, which opened about 50 years ago, will make Peugeot’s 208 hatchback, 301 sedan and 2008 crossover.
French container line CMA CGM SA also agreed to cooperate on shipping and terminal development. Suez Environnement Co. will work on water-treatment measures in Tehran, Sanofi signed an accord on health products and Total SA inked a purchase accord for Iranian crude oil.
It’s “not surprising” that Italy and France have been first-movers in drumming up business with Iran after the lifting of sanctions, given that prior to 2011 some 20 percent of the Middle Eastern country’s trade was with Europe, Florence Eid-Oakden, chief executive officer at Arabia Monitor, said in a Bloomberg Television interview.
Bloomberg Business
Iran confirms Airbus deal
