Iran Air agrees to $25B deal with Boeing to modernize fleet

CHICAGO, June 21 (UPI) -- Aerospace giant Boeing on Tuesday announced it has reached an agreement with Iran Air to sell the national carrier dozens of airplanes in a new deal that could be worth as much as $25 billion.

Under the agreement, Boeing will build and deliver 100 of its latest 777 an 737 models to the Tehran airline.

The memorandum of agreement between the American aviation giant and Tehran is precisely the type of result negotiators had in mind last year when the United States and five western allies struck an accord to lift economic sanctions against the Middle Eastern nation, in exchange for restrictions on its nuclear program.

"Boeing will continue to follow the lead of the U.S. government with regards to working with Iran's airlines, and any and all contracts with Iran's airlines will be contingent upon U.S. government approval," Boeing said in a statement Tuesday.

The company did not specify when the deliveries would be made or how much the deal might be worth, but industry experts estimated the pact's value to be between $17-$25 billion.

Iran Air, Tehran's national carrier, is the oldest airline in the Middle East. Iranian officials have previously announced plans to modernize its fleet with as many as 500 new aircraft over the next decade.

Iran Air, Tehran's national carrier, has agreed to purchase 100 new airplanes over the next decade from American aviation company Boeing in a deal worth as much as $25 billion, aerospace officials said Tuesday. The airline, pictured, agreed to a similar deal with Boeing competitor Airbus in January in an effort to modernize its aging fleet. File Photo by Marco Wolf/Shutterstock

The deal, however, still must receive approval from the U.S. government. A similar agreement in January between Iran Air and France-based aerospace company Airbus is still awaiting approval from regulators in Washington because parts of Airbus planes are manufactured in the United States.

Further, how Iran Air will pay Boeing for the new planes is also unknown since American banks are still barred from engaging in business practices with Tehran's government.

Many lawmakers have disagreed with the Obama administration's securing the nuclear deal last year and continue to resist its installation.

The deal reflects Iran's increasing political shift toward the West since President Hasan Rouhani pledged to improve relations between the Middle Eastern nation and the United States when he took office three years ago. Prior to his election, relations between the two nations had been terse for decades dating back to the revolution that ousted the U.S.-backed shah in 1979 and led to a hostage crisis that spanned 444 days.

Also Tuesday, Boeing announced an agreement with Turkish officials on further investment in the airport in Istanbul.

"We look forward to working with [the airport's operator] to find the most effective operational concepts for the Istanbul area, as part of the overall investment in the infrastructure of Turkish aerospace," Aysem Sargin, managing director of Boeing Turkey, said. "We will be able to show the impacts of all operational concepts and assist the Istanbul New Airport team to make the most informed decisions possible."

By the end of Tuesday, Boeing (NYSE: BA) had lost $1.23 per share on the New York Stock Exchange.