Boeing to Lose $20 Billion Aircraft Deals Due to Trump’s Withdraw from Iran’s Nuclear Pact
Last Tuesday, President Trump announced that the United States will withdraw its nuclear Pact with Iran. The new move of the Trump Administration threatens Boeing in losing multibillion-dollar deals since the American commercial airline helps in restocking Iran’s aging commercial fleet.
The Broken Pact
One major part of the nuclear pact is for Boeing to sell planes to Iranian airlines to help administer their airports and cater their growing number of flights and passengers on a daily basis.
The American airline company is set to produce 80 jets for the country. The first 50 of which are 737 Max 8 model for Iran Air. Meanwhile, the company entered another deal with Iran Aseman Airlines to purchase 30 Boeing 737 Max planes last April 2017.
If deemed successful, the Iranian airline may opt to buy 30 more. The number of ordered aircraft indicated in the agreement is small compared to the company’s total order booked worldwide.
However, Boeing encountered a backlog of more than 5,800 airplanes for the first quarter of 2018. Aside from that, it also has more than 4,600 orders for 737s. Although Boeing clarifies that the Iranian deals aren’t included in the order book and the current backlogs of the company won’t be affected.
However, its European rival Airbus already included the deals with Iranian airlines in their order book. Boeing also stated that they will have to consult with the US government to better determine their following steps. The company’s shares declined by 0.6% in the stock trade yesterday due to the said announcement.
Restoring the Sanctions
Last Tuesday, Trump announced the withdrawal was made in an attempt to restore the sanctions on Iran. He noted how Iran didn’t fulfill their part on limiting their nuclear program. The US offered to deal with Iranian’s lack of aerospace supplies and commercial planes in exchange for giving up their nuclear projects. Boeing’s CEO, Dennis Muilenburg, also downplayed US’ withdrawal from the deal.
He claims it won’t affect the company’s profit and sales due to the pile of backlogs they still need to meet. While he admitted the deal would’ve boosted their sales, the current 777 production rate of the company is not solely dependent on Iran orders. As of March 2018, Boeing has more than 400 orders for 777, 15 widebody orders for 77-9, and 777-300ER models all over the world.
Downsizing Boeing’s Workforce
Even if the said announcement will not most likely affect Boeing’s backlogs, the company admits they have to downsize their current labor workforce because of the decreasing demand. When Boeing announced the Iran Air deal, it created and opened up around 100,000 US jobs.
If possible, they also want to request the President to reconsider its decision in their upcoming consultation. The company may lose around $20 billion not just for the severed deal but many of their employees may also lose their jobs.
Meanwhile, the largest European aerospace, Airbus, will also lose a major deal if the US reinstate its sanctions to Iran. Airbus currently has a deal to sell 100+ jets to Iran. Their production of jets for Iran orders could be affected since one of its plants is located in the US and the company imports some of the planes’ spare parts from the US.
Airbus released a statement about the issue and said that they’re currently analyzing and assessing the said sanctions. The company will also evaluate their internal policies to maintain consistency and full compliance with export control regulations and sanctions.
More in Legal Advice
Free This Debt to Live a Comfortable Retirement!
As we become an adult, we face extremely challenging experiences like budgeting our salary to pay our bills and responsibilities. We...August 21, 2018
Tesla Stocks Drops to Its Worst Performance in Two Years After Elon Musk’s NYT Interview
Tesla’s shares drop to an astounding $1 billion in a day after the New York Times published an interview with CEO...August 21, 2018
You Should Know This One Hard Truth Before Becoming a Home Flipper!
Sidney Torres is known for being a self-made millionaire. He earned his money by renovating houses in New Orleans. Now that...August 21, 2018
Experts Reveal The Best Way to Build Your Retirement Fund
Everyone wants to have a comfortable retirement. We look forward to the day we finally stop working and start living our...August 20, 2018
Before You Start Searching For Love You Need To Read This 7-Year-Old Boy’s Love Story
Sometimes in life, when you least expect it, that’s when love hits you. Just like this love story about two people...August 20, 2018
Harley-Davidson Employees Enraged with Layoffs After Tax Cut
The iconic Harley-Davidson surprised thousands of its employees when they announced the layoffs, despite the company expecting huge privileges from the...August 10, 2018
How to Ramp Your Business On Social Media Marketing in Summertime
With summer in full swing, now is the time to ramp up social media campaigns and get in front of the...August 7, 2018
6 Ways You can Save for Retirement in Your 30’s
If you are in your 30’s or something, then you should have already started saving for your retirement. If you haven’t...August 5, 2018
6th Anniversary of FB IPO Shows Massive Rise in Prices
Last Friday was the most anticipated day for Facebook investors. Why? Because it’s the company’s sixth anniversary of its initial public...August 5, 2018