Iran to buy 114 Airbus aircraft

In one of its first major transactions since international sanctions were lifted, Iran plans the purchase of 114 Airbus aircraft

Iran's plan to purchase a new fleet of aircraft will renovate Iran Air, the national carrier 

With Western economic sanctions against Iran now lifted, the country has embarked on a new strategy to boost its flagging economy. In what is expected to be one of its first major deals, Tehran is seeking to purchase 114 civilian planes from the Airbus Group, the Minister of Transportation, Abbas Akhoundi, revealed on January 16. According to Bloomberg, the purchase will include both new and old A320 aircraft, as well as several A340 planes, which are no longer in production.

Commercial talks with Airbus have not yet begun, but the purchase is estimated to be worth around $10bn. The potential is therefore huge, and underscores several other opportunities now present for the market.

As part of the nuclear deal made with six world powers last July, Iran agreed to scale back its development activities in exchange for easing sanctions on several of its industries, including banking, transportation, insurance, medicine and consumer goods.

Since the agreement was first made, world powers have allowed the sale of aircraft parts and training manuals to Iran, thereby providing much relief to its ageing fleet and the associated safety concerns. Akhoundi’s announcement thus marks Tehran’s first big step to renovate its national airline carrier, Iran Air, and boost its fleet in order to meet domestic demand and expand its international travel potential.

Naturally, there are various challenges that lie ahead as Iran enters into a new stage in its economic development: Tehran must swiftly address its undeveloped legal system and high levels of corruption, as well as push for greater flexibility in its labour market. Other concerns include the state’s indebted financial sector, as well as the possible reintroduction of sanctions, should Iran’s compliance slip.

With a population of 78.5 million and a GDP of more than $400bn, as estimated by the World Bank, Iran is the largest economy to re-enter the global system since the collapse of the Soviet Union. As such, the impact to the global economy will be considerable – and aviation is just the start.