Iran to buy 114 Airbus craft in first major deal with EU

Iran is planning to sign a contract with European manufacturer Airbus to buy 114 aircraft in what would be the first big deal to emerge from Tehran's landmark nuclear pact with global powers.

The Airbus deal is the highlight of a visit to Rome and Paris this week by President Hassan Rouhani that is turning into a business bonanza.

Following the implementation of the nuclear accord last week, and the lifting of many sanctions, Mr Rouhani’s government is determined to show Iranians the economic benefits of its diplomacy.

European governments are also keen to open doors to a lucrative market. A senior Italian official said companies in Italy would sign about €17 billion worth of deals when Mr Rouhani comes to Rome on Monday on the first leg of his European tour.

Jitters

Iranian officials were reluctant to provide details on the type of Airbus aircraft they were considering. They also displayed some jitters about the outcome of the negotiations.

"Please do not destroy the contract and let us continue our negotiations," Farhad Parvaresh, head of Iran Air, the national carrier, told reporters.

But Abbas Akhoundi, Iran's minister of transport, said the first aircraft could join Iran's ageing fleet as early as March. They would represent an upgrade for a fleet that has an average age of 25 years and includes some aircraft that predate the 1979 revolution.

Iran is also interested in buying aircraft from US maker Boeing, Mr Akhoundi added.

Warming relations

Mr Rouhani’s visit to Europe will be the first for an Iranian president in more than a decade, and reflects the Islamic regime’s warming relations with the west after years of hostility.

Mr Rouhani, who hosted China’s president Xi Jinping on Saturday, has said he hopes to attract up to $50 billion in foreign investment annually.

Europe's banks and corporate sector could be key to that ambition since US firms are still hamstrung by non-nuclear sanctions Washington continues to impose on Iran.

The Italian official said the deals to be signed on Monday were “just the beginning” and executives from several other Italian companies, such as Eni, Enel, Finmeccanica and Ferrovie dello Stato, would also participate in the meetings in Rome.

Mr Rouhani is to meet Matteo Renzi, Italy's prime minister, on Monday evening, before a dinner that will include Italian business and government figures.

After a stop-off in the Vatican to visit Pope Francis, he will then travel to Paris on Wednesday to meet his French counterpart, François Hollande.

– (Copyright The Financial Times Limited 2016)