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Boeing In Danger After Trump Pulled Out Of Iran Deal

On Tuesday, Donald Trump announced that he will withdraw America from Iran nuclear pact. But this decision had a major impact on Boeing which may lose up to $20 billion. Boeing, the largest aerospace company in the world had a deal to provide Iran with airplanes having a total worth of $20 billion. This order that was made to Iran looks smaller before the whole order book of Boeing. The company manufactured almost 5,800 airplanes in the first quarter of this year. According to Boeing officials, they did not add Iranian orders in the order book, therefore after cancellation, the order book remained same.

However, the biggest rivals of Boeing, Airbus included the Iranian orders to their order book. After this whole matter, an official statement was released by the Boeing in which it was stated that the company will now discuss the matter with the US government and after that next steps would be taken. Pulling out of Iran nuclear deal, took the shares of Boeing down to 0.6%. While speaking to the media on Tuesday, US president said that he would restore all the sanctions on Iran.

Trump cost Boeing almost $20 billion after the president pulled out of the nuclear pact with Iran.

Iran is considered as one of the largest buyers of airplanes from Boeing. In December 2016, an Iranian airline company Iran Air got 80 jets from Boeing and in April 2017, another Iranian airline named Iran Aseman purchased 30 airplanes from Boeing. When Boeing received an order from Iran Air, it created 100,000 US jobs. Boeing’s rival Airbus also announced to sell 100 jets to the same Iranian Airline. According to vice president of Teal Group, Richard Aboulafia, Iran jet deal will not have a big impact on Boeing as the backlog of the company is pretty large with 737 aircraft.

Last month, CEO of Boeing Dennis Muilenburg also said that current production rate of the company is 777 and it does not depend on the Iran deals. The agreement signed between Boeing and Iran Air back in 2016 included 15 jets of 777-300ER model and 15 of 777-9 model.

While speaking to the media on Tuesday, Treasury Secretary Steven Mnuchin said the license of Boeing and Airbus will be canceled officially. And according to sources, the airplane contract with Boeing was the most desirable one for Iran. Back in December 2016, a deal was agreed between Airbus and Iran Air in which Airbus said to provide Iran Air with 100 new jets with the total cost amounting to $19 billion.

But until now, only 3 planes have been handed over to the national carrier Iran Air. While speaking on this matter, the vice president of Boeing Gordon Johndroe said that they will follow the instructions of US government as they had been doing for a long time.

However, the Boeing’s rival Airbus will also feel the aftershocks of US-Iran separation as most of the spare parts of Airbus comes through America. Almost 10% of the plane parts of Airbus made in the USA. The electric companies of the United States include Rockwell Collins and General Electric and United Technologies make the parts of these jets.

According to Mnuchin, Trump would also impose a ban on the Airbus parts manufactured in the US. Mnuchin further said that most of the heavy industries will be affected by this ban and these bans will bring Iran back to where it is started – on table talk. Such sanctions worked in the past and they would definitely work this time, said Mnuchin.

Trump also imposed a ban on Airbus’s plane parts which were made in the US

There are chances of such exclusions, said Mnuchin but he did not have enough detail to talk about these exclusions. According to Trump administration, the president would give the time period of 90 days and 180 days to all the US international companies to revoke their businesses from Iran. The president has agreed to follow the same oil sanctions on Iran as it were in the reign of Obama. In the reign of Obama, the sale of oil from Iran fell down to 1 million barrels a day.

According to Mnuchin, the US started talking to five other nations to increase the production in order to avoid oil offset from Iran. He was not sure about the nations but said Saudi Arabia could be one of those nations.

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