Airbus First To Sell Planes To Iran

| About: Airbus SE (EADSF)
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Summary

Iran Air ordered a total of 118 aircraft.

The rumor that the A340 would be part of the order mix is not true.

Currently Iran's total fleet averages well over 25 years.

Sanctions against Iran have been lifted as the country abided by the wishes of the international community to dismantle its nuclear program. This opened up the possibility for international companies to do business with Iran again.

The aircraft market is one of the markets that is underdeveloped due to the sanctions. Most Iranian air fleets are averaging well over 25 years, twice the international average. Once sanctions were lifted Airbus (OTCPK:EADSF/OTCPK:EADSY) was the first to negotiate a mega order with Iran Air. In this article I will have a look at the order mix and shortly comment on the importance for each aircraft type.

Figure 1: An Iran Air Airbus 300 during take-off (Source: airplane-pictures.net)

Order

Figure 2: Infographic order Iran Air (Source: AeroAnalysis.net)

Iran Air ordered 118 airframes, a mix of narrow- and wide body airframes, with a market value of $12.4bn. At list prices the order is valued at $27.6bn (assuming that the ordered A330ceos are A330-300s). This means that the minimal discount Iran Air received is 54.4% and given the size of the order it is safe to assume discounts are slightly closer to 60%. The order consists of 60% wide body aircraft and 40% narrow body airframes. Currently Iran Air operates 43 aircraft. Assuming that almost all current fleet members will be replaced, the Iran Air fleet will almost triple in the coming years.

Initially it was rumored that the Airbus A340 would be part of the deal, but it seems that Airbus persuaded Iran Air to take delivery of the Airbus A330 instead.

Airbus A320ceo

The order consists of 21 Airbus A320ceo. With over 1000 unfilled orders in backlog for the Airbus A320ceo, the addition to the A320ceo backlog is just 2%. Most likely the ceo is part of the deal, because delivery slots for the Airbus A320neo aren't available any time soon.

Airbus A320neo

Next to the A320ceo, the A320neo was also part of the deal. A total of 24 airframes have been ordered, but given the 4400+ backlog it will take years before these airframes will be available to Iran Air. Nevertheless, ordering the neo is a good sign for Airbus as it might lead to a follow up order once expansion of the fleet speeds up.

Airbus A330ceo

Airbus has reduced production of the Airbus A330, but so far it does not seem to have problems filling its delivery slots. Most probably the high discounts and early availability are the main drivers for the A330ceo in 2015 and 2016. Iran Air ordered 27 A330s, making it the most ordered aircraft in the mix of 118 aircraft.

Airbus A330-900

Just like with the Airbus A320, the order for the A330s is a combination of the classic engine option aircraft and the new engine option. Iran Air ordered a total of 18 Airbus A330-900s, a welcome 11% addition to the A330neo backlog.

Airbus A350-1000

Iran Air also was charmed by the Airbus A350 and ordered 16 units of the -1000 variant. The impact on the backlog is a mere 2%, but a welcome addition nonetheless.

Airbus A380

Probably the pinnacle of the order is the order for the Airbus A380. Iran Air ordered 12 units that will be delivered from 2019 and onwards. According to my calculations that I presented in an earlier piece there are about 90 units in backlog that Airbus will most certainly deliver to customers. Taking into account that Airbus produces about 30 superjumbos per year (indicating 3 years of production) and the fact that delivery of the superjumbos to Iran Air will start in 2019 do somewhat support my calculations. In the end Airbus secured a new customer for the Airbus A380 and the second new customer in just a matter of weeks, which is a huge step forwards for the program.

Conclusion

  • The ordered airframes are primarily wide body aircraft
  • In order to be able to offer early deliveries the order is a mix of ceo and neo aircraft
  • The order for 12 Airbus A380 aircraft probably is something Airbus will be most pleased with

Disclosure: I am/we are long BA.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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