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 But despite talk of a major plane order from Airbus <AIR.PA>, a raft
of legal, financial and regulatory hurdles remain as Iran seeks
foreign investor backing for plans to overhaul its dilapidated
aviation sector.
"We are seeing massive opportunities in Iran," said Peter Harbison,
chairman of the Centre for Aviation (CAPA), an Australian
consultancy, adding that Tehran needed funding, organization and
manpower to do everything its airlines intend.
"Without each of those ingredients, the growth is going to be much
less than optimal," he said after chairing a major Tehran aviation
conference.
A shopping list for over $20 billion of Airbus jets carried to
Europe by Iranian President Hassan Rouhani this week is seen as a
test case for post-sanctions trade because of the sums involved and
state-of-the-art financing used in the jet market.
Although Boeing jets are not involved, completing the Airbus deal
depends on the approval of the U.S. Treasury, which must approve
sales to Iran of jets with over 10 percent U.S. parts.
Even then, Iran must work out how to pay for the jets, delegates at
the Iran Aviation Summit organized by CAPA said.
Iran on Monday urged Washington to remove any lingering obstacles to
implementation of the accord under which sanctions were lifted in
return for curbs on its nuclear activities.
"I expect a very short process. Actually we expect them to expedite
all these efforts to .. open the way for legal business cooperation
between Iranian and foreign entities," deputy foreign minister Abbas
Araqchi told reporters at the CAPA event.
Washington has said Iran may still not use its financial system,
raising potential difficulties for jet deals denominated in dollars.
If Iran pays for its planes in euros, any money subsequently
converted into dollars may create problems.
A senior Iranian official said Tehran was in touch with the U.S.
Treasury to clarify the status of such transactions. U.S. officials
could not immediately be reached for comment.
Iran meanwhile faces warnings that Western banks may hold off from
backing aircraft and other deals until rules are clear.
"I think we need much more clarity on what (the U.S. Treasury) is
going to authorize or not," said Bertrand Grabowski, a managing
director at Germany's DVB Bank.
In a further twist, Iranair remains locked out of a dedicated global
financial system for air tickets because it is based on laws of
Canada, which has not lifted sanctions on Iran.
"To have Western banks effectively financing directly aircraft to
Iranian airlines is going to be a tough call. This isn’t going to
happen in the next 18 months," Grabowski said.
However, he said some banks may be more willing to support the
activities of leasing companies working in Iran.
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POSITIVE SIGNAL
Aircraft leasing companies, who control about 40 percent of the
world's fleet, eagerly touted for business at the Tehran event,
joined by suppliers from 35 nations offering Iran badly needed wares
from avionics to airports.
"We are behind, we admit that," Deputy Transport Minister Asghar
Fakhrieh Kashan said.
"Therefore we have decided to ... look for the solutions and try to
find proper responses to any questions" on funding.
Kashan said Iran was looking at joining the 2006 Cape Town
Convention, a treaty of more than 60 nations designed to boost trade
by protecting aircraft owners in return for cheaper financing.
"That is a very positive signal for me," said Dick Forsberg, head of
strategy at Dublin-based leasing company Avolon, while warning
investors Iran would not be a "gold rush".
Privately, some foreign delegates said doing business in Iran was
still a complex puzzle, further obscured by upcoming elections.
President Rouhani, a pragmatist, has been trying to attract
technology and investment to bolster Iran's shattered economy. But
some analysts say political in-fighting, and the possibility of
fresh sanctions if Iran violates the deal, worry investors.
Allies of Supreme Leader Ayatollah Ali Khamenei, who has the last
say on state matters, have already begun to criticize new oil
contracts that are also designed to attract investors.
While Iranian officials gave assurances that they would respect
foreign investors' ownership rights, some delegates at the aviation
conference saw potential sticking points over Iran's attitude to
collateral on some transactions.
Britain's export credit agency said last week it was open to doing
business in Iran, boosting the prospect of aircraft sales. But such
agencies typically demand security on the jet even if the buyer is
government controlled and can put up a state guarantee to pay money
owed.
That may be a problem for Iran, which regards its sovereign-backed
guarantees as word enough and is reluctant to offer collateral on
the asset as well, delegates said.
Grabowski said Iran had reassured investors but "they need to
deliver, and this is where it is going to be difficult".
(Reporting by Tim Hepher; Editing by Peter Graff)
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