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Published: Saturday June 7, 2014 MYT 9:25:24 PM
Updated: Saturday June 7, 2014 MYT 9:26:30 PM

Iran airline eyes fleet growth plans post-sanctions

DOHA (Reuters) - Iran Air will need at least 100 passenger jets once sanctions against the country are lifted and will find it easier to do business with companies that co-operated during the current window for sanctions relief, the head of the airline said.

However, in the absence of a long-term deal easing the country's economic isolation, Iran's flag carrier will turn instead to Russia and China as alternative suppliers, Farhad Parvaresh, chairman and managing director of Iran Air, said.

The comments, in a rare interview with foreign media on the sidelines of an airline conference this week, come as Iran and six nations prepare to resume negotiations on a final deal aimed at ending a decade-old dispute over Tehran’s nuclear programme.

A preliminary deal was signed in Geneva in November, under which Iran accepted to halt some sensitive nuclear activities in exchange for partial easing of sanctions. The accord, which took effect on Jan. 20, was designed to buy time for a final deal within six months and allows for the sale of aircraft parts.

Asked if it would be easier to do business in future with companies that had co-operated under the temporary Geneva deal, Parvaresh told Reuters: "Yes, that is for sure".

He added: "To my understanding, if sanctions are lifted in aviation, we would need at least 100 aircraft right away, both widebody and narrowbody."

U.S. companies Boeing Co and General Electric Co have said they are seeking to export parts to Iran under the agreement for sanctions relief which expires on July 20.

Parvaresh said Europe's Airbus Group NV was also working with Iran under the temporary agreement. A spokesman for Airbus, which has previously only said it was considering this, confirmed it had asked Washington for a spares export license.

IN CONTACT

Parvaresh listed Western models which he said would fit the airline's networks, including the Airbus A320 and Boeing 737-800 narrowbody jets, and wide-body long-haul jets such as the A330 and A350, 777 and 787 and "maybe" the 747-8.

He also cited Canada's Bombardier Inc and Brazil's Embraer SA, two companies challenging for a slice of the $100 billion annual market for jetliners.

"We can work with all of them," he said. "Even if the aircraft are not available immediately, we can easily lease."

He confirmed estimates that Iran would ultimately need as many as 400 aircraft and said its strategy would be to compete with the fast-growing hubs of Gulf carriers.

Asked if Iran Air was already talking to planemakers about its needs in case sanctions are lifted, Parvaresh said: "We are in contact with many aircraft manufacturers. Before it was not easy, but now it is not forbidden for either side."

Asked whether those discussions included Airbus or Boeing, he said: "Both are looking at the Iran market but there are also other manufacturers".

An Airbus spokesman said: "We are not in commercial negotiations with Iran".

A spokesman for Boeing reiterated it had been granted a temporary license to sell Iran spare parts. "Any discussions we've had with Iranian airline officials have been in strict accordance with that license and U.S. government policy."

Formalities needed to get the parts under the Geneva deal are meanwhile taking time, complementing diplomatic pressure to extend the July 20 deadline.

"We in Iran Air hope the negotiations will conclude positively or be extended," Parvaresh said.

The potential of a country of 76 million people and some of the world's biggest oil and gas reserves makes it a magnet for foreign firms seeking long-term opportunities.

RUSSIA, CHINA

Diplomatic sources say U.S. companies will be the first to benefit if a broader softening of sanctions is agreed, but European firms are likely to be reluctant to watch U.S. rivals take the lion's share of future business as they did in Iraq.

Besides Brazil and Canada, Russia and China are working on new narrowbody jetliners scheduled to enter service from 2017.

Moscow and Beijing have also agreed to co-develop a bolder widebody jet, marking a significant step in an emerging alliance between the two powers, but expected to take at least a decade.

Asked what would happen if talks on easing sanctions broke down, Parvaresh said: "Because there is a need in Iran, the Iranian aviation industry will definitely go to Russia or China."

He added: "If negotiations do not go well, we will not lose much, but on the other hand moving forward and growing is good for all of us business-wise. We will continue our previous methods and ways. We are very experienced now."

Iranian authorities for years said sanctions had no negative impact on the country, arguing they made Iran self-sufficient. But since the landslide election win of pragmatist President Hassan Rouhani last year, authorities have blamed sanctions for the country’s economic hardships.

"Experience shows that what they did to us wasn't successful. Both experimentally and theoretically, it didn't work," Parvaresh said.

The United States and other Western powers say sanctions have forced Iran to compromise on nuclear activities that the West believes include plans for a bomb, something Tehran denies.

The United States last week fined a Dutch firm for breaking sanctions, but Iran says it can find what it needs, at a cost.

"It always has to be done through dealers and they of course take advantage," Parvaresh said. "It is not easy, but there are always ways ... For some parts we pay up to 200 percent higher."

(Editing by David Holmes)

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