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Boeing could lose $20 billion in deals as Iran pact collapses

CNBC logo CNBC 5/8/2018 Michael Sheetz

President Donald Trump announced Tuesday he will withdraw the U.S. from a nuclear pact with Iran , a move that threatens Boeing's multibillion-dollar deals to help restock the aging Iranian commercial air fleet. 

The world's largest aerospace company has agreements to supply Iranian airlines with planes worth roughly $20 billion, based on list prices. The number of aircraft in the agreements is tiny compared with Boeing's total order book, however. Boeing ended the first quarter of this year with a production backlog of more than 5,800 airplanes, including more than 4,600 orders for 737s.

Shares of Boeing were down 0.3 percent in afternoon trading.

Boeing announced the largest of these deals in December 2016: 80 jets for Iran Air – including 50 of the 737 MAX 8 model. In April 2017, Iran Aseman Airlines signed an agreement to purchase 30 Boeing 737 MAX planes, with an option to buy 30 more. Both deals came after the nuclear pact that was signed in 2015.

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Boeing has said that it continues "to follow the U.S. government's lead" on selling planes to Iranian companies.

In 2016, when it announced the Iran Air deal, Boeing said such an order would support 100,000 U.S. jobs.

If the aircraft agreements are scrapped outright, it won't likely have a big impact on Boeing because of the company's large backlog of jets, particularly for narrowbody 737 aircraft, said Richard Aboulafia, vice president at Teal Group.

"Would have been nice to get but far from a major impact," Aboulafia said.

On orders for the widebody 777, for which it had more than 400 orders at the end of March, Boeing CEO Dennis Muilenburg last month said on an earnings call that its production rate for that plane "we've put in place is not dependent on the Iranian orders."


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