$20 Billion of Boeing Business Potentially at Risk From Trump
Joe Cortez February 02, 2017
Orders to Iran and other countries in jeopardy due to executive order.
In addition to the toll paid on individuals, the Executive Order barring entry into the United States to individuals from seven nations could have another unintended financial consequence. CNBC reports a Middle East deal struck by Boeing could be in jeopardy due to the far-reaching limits of the Executive Order.
In June 2016, Iran told the world it had come to terms with Boeing to order 100 commercial aircraft from the Chicago-based manufacturer, for use with state-run airline Iran Air. However, the company was not cleared to complete the transaction until September 2016, when both Airbus and Boeing were given licenses by the U.S. Treasury Department to sell to the sanctioned country. By December 2016, Boeing and Iran finalized the deal, valued at $16.6 billion.
With the travel ban directly affecting both Iran and Iraq, analysts are concerned that the Iran Air deal could ultimately face cancellation. In addition, Boeing has pending deals for aircraft delivered to Iraq. Combined, the two deals could cost the airframe builder approximately $20 billion in business if cancelled.
“We think the president’s travel ban could have negative implications for orders from Iran and Iraq,” James Corridore, aerospace analyst for CFRA Research, told CNBC. “We see these contracts as vulnerable to cancellation, though we also think it possible that the current injunction against the travel ban will be upheld, which could lessen the impact.”
The Iran Air deal could be the first of many major problems for Boeing in the near future. After agreeing to open a 737 finishing center in China, analysts also worry that trade sanctions promised by President Trump could affect Boeing’s business in Asia. Boeing chief executive Dennis Muilenburg downplayed concerns to CNBC, noting that a healthy trade relationship between the United States and China was important.
This is not the first time Boeing and the Trump administration have been at odds. Prior to his inauguration, Trump criticized the price of the new Boeing Air Force One program in a tweet, which lead to a meeting between the two sides.
[Photo: Shutterstock]
That's the price of fighting terror and keeping America safe. It's isn't "because of Trump". It's because of Iran.
COU, Yes let's lose these billion dollar deals, who cares they are American jobs. They can all work at Walmart for $10 instead.
Why are we dealing w/countries that would steal our technology and slit our throats given the opportunity? Shame on money grubbing Boeing.
COU, I second ioto1902's questions. In your view, what makes Iran worse than let's say Saudi Arabia for example? Thank you.
COU, very interesting. What do you know about Iran ? Do you know that some US companies are doing (big) business in Iran, and, actually never ceased to do it behind shadow companies ? So, you think, Saudi Arabia is much better ... ? Please first study the countries of this region, with what the French, English and Americans have done, before posting media twisted comments.