Boeing‘s top executive in the Middle East said the company’s conservative strategy will protect it from any loss of business with Iran.
Boeing is playing down an estimated loss of $20 billion of sales to Iranian airlines after the U.S. moved to withdraw from a nuclear pact and re-impose sanctions on Tehran. Treasury Secretary Steve Mnuchin announced Wednesday that Boeing licenses to sell aircraft to Iran would be revoked following President Donald Trump‘s decision.
The President of Middle East, North Africa, and Turkey for Boeing, Bernard Dunn, told CNBC’s Hadley Gamble in Bahrain on Thursday that the impact on overall business will be minimal.
“We mitigated the risk of Iran in our production plans. For 777 and 737 programs, there will be no risk at this time. Beyond that, we are following the lead of the U.S. government and we will consult with them as necessary,” he said.
Dunn added that Boeing was a conservative company and that earnings results underlined a risk-averse strategy.
“Anything that happens for us with Iran would have been and will be, an opportunity. Beyond that, we are just going to follow the U.S. government on this.”
The comments echoed CEO Dennis Muilenburg who said in Washington Wednesday that the company had not committed any production slots for planes to sell to Iran and it would “follow the U.S. government’s lead.”
Boeing has early agreements with Iranian airlines for 110 planes worth about $20 billion at list prices. This pales with the U.S. firm’s wider backlog which at the end of March, sat at about 5,800 airplanes.
The U.S. planemaker announced the largest of its deals with Iranian airlines in December 2016. This included 80 jets for Iran Air, including 50 of the 737 MAX 8 model.
And in April 2017, Iran Aseman Airlines signed an agreement to purchase 30 Boeing 737 MAX planes, with an option to buy 30 more.
Airlines analyst at Seeking Alpha, Dhierin Bechai, said in a note Wednesday that Boeing’s deals with Iranian customers have only ever reached a tentative stage.
“It is hard to speak about a loss for Boeing, since no final purchase agreements with Iranian customers were ever drafted and it’s really simple, you can’t lose any orders if you didn’t log any,” Bechai said.