* Iran said to need at least 400 jets in next decade
* Jetmakers adopt cautious tone despite big potential market
* Suppliers assess legal, regulatory, political risks
* Jetliner demand seen as test case for reopening business
By Tim Hepher and Conor Humphries
DUBLIN, Jan 22 (Reuters) - Freed from nuclear-related
sanctions, Iran has signalled its appetite to buy more than 100
Western planes, a prospect that would usually have the giants of
the $130 billion-a-year jet industry scrambling for a piece of
the action.
But a muted response from both Airbus AIR.PA and
arch-rival Boeing (N:BA) BA.N underscores the lingering uncertainty
and complications of doing business with Tehran.
Western and Iranian officials say Iran will require at least
400 jets over a decade to replenish its ageing fleet. Of those,
100-200 are pressingly needed, and would be worth over $20
billion at list prices.
That makes it a hugely enticing market at a time when
planemakers are facing a slowdown after years of strong orders.
But industry leaders say it could take months or longer to
remove all the legal, regulatory and political obstacles so that
significant numbers of jets can be sold to Iran, which still
remains subject to a broad range of other U.S. sanctions.
"This is an opportunity in a big market that needs a lot of
replacement capacity, let alone growth capacity. But we have to
be crystal clear that sanctions have been removed," said Aengus
Kelly, chief executive of Dutch leasing giant AerCap AER.N .
The willingness and ability of planemakers to enter the
Iranian market will provide an early test case of how quickly
the country can reopen for business after years of U.N., U.S.
and European Union sanctions over its nuclear programme, which
the West feared was aimed at developing weapons. Iran has always
denied that charge.
In recognition of Tehran's moves to curb its atomic
programme, the nuclear sanctions were lifted on Saturday. The
same day, an Iranian news agency quoted the transport minister
as saying Tehran had "taken the first step in agreeing with
Airbus to buy 114 planes".
The announcement caught some European officials off guard
and drew a cautious reaction from the planemaker itself, which
said it could not start negotiations before laws allowed.
Still, analysts said the comment delivered a clear signal to
foreign businesses and political rivals in the region that Iran
was serious about restoring its economy and welcoming investors.
WELCOME TO TEHRAN
Echoing that sentiment, Iran is to host aviation leaders on
Sunday and Monday at a Tehran conference together with
Australian consultancy CAPA to discuss ambitious plans to
restore and expand its airline and tourism industries.
The first major business gathering since the lifting of
sanctions comes against the backdrop of opposition to the
nuclear deal from Republicans in the U.S. Congress and
escalating tensions between Iran and Saudi Arabia.
That leaves aerospace firms, especially those based in the
United States, facing a dilemma over whether to risk upsetting
Congress and key Gulf customers, or bide their time and lose
business, diplomats and industry sources said.
Despite its edge over rival Boeing in the headlines, any
deals Airbus strikes will also require U.S. licence approval,
since more than 10 percent of its planes come from U.S. parts.
With significant U.S. interests including a new Alabama
factory, the European company is expected to tread carefully.
"We are studying our way forward ... in full compliance with
all international laws," a spokesman said.
Although Washington has liberalised rules to allow U.S. and
foreign firms - including Airbus - to seek licences to sell
passenger jets to Iran on a case-by-case basis, Boeing and other
U.S. companies have displayed little appetite to take the lead.
"Europe dialled restrictions down from an eight to a four,
while the U.S. went from 11 to 9 on a scale of 10," said
Christopher Swift, a former U.S. sanctions official and a
lawyer at Washington-based Foley & Lardner.
A Boeing spokesman said, "There are many steps that need to
be taken should we decide to sell airplanes to Iran's airlines.
For now, we continue to assess the situation."
SANCTIONS SNAPBACK
Some aircraft executives are worried about the risk that
sanctions can be reintroduced if Iran fails to curb its nuclear
activities, under a so-called 'snapback' mechanism.
If that were to happen, there are conflicting views on the
status of any deals negotiated during the break in sanctions.
Republican candidates have meanwhile signalled a more
aggressive posture towards Iran if they succeed President Barack
Obama in the Nov. 8 U.S. election ID:nL2N1532BL .
"I think there is a huge opportunity. But I think most of
us, especially in the U.S., are a bit cautious," said John
Plueger, president of Air Lease Corp AL.N . "We have an
election coming up in the United States (and) we could have a
very different person in the White House in November."
European business groups have displayed more willingness in
recent months to put out feelers to Iran, vexing their U.S.
rivals. Lawyers say this stems in part from a discrepancy in the
way the lifting of sanctions has been implemented.
"In Europe it is 'Yes Unless' and in the U.S. it is 'No
Unless'," Brian Mulier, partner of law firm Bird & Bird, said.
A senior Western diplomat said companies would have to make
their own decisions and their reticence was understandable.
"If I was a company I would certainly be wanting to look at
the opportunity, but I would also want to be looking at how
stable I thought this was and how confident I was that the
Iranian government was going to keep its word," the diplomat
said on condition of anonymity.
Iranian President Hassan Rouhani said on Monday his country
would not breach its deal with world powers as long as the West
honoured its commitments.
In an opportunity for further business announcements,
Rouhani is due to visit France, where Airbus is based, on Jan.
27. Iran says it welcomes U.S. and European companies, but has
made clear it will also look towards Russia and China.
LEGAL TESTS
Sponsors of Sunday's Tehran meeting include Chinese-backed
Dublin leasing firm Avolon and other foreign lessors, who could
have a significant role due to long delivery times for new jets.
Lessors control 40 percent of the world's fleet and act
nimbly, moving jets around the world to meet demand. But they
need to be confident they can always recover their assets.
Iran may be urged to join a treaty of over 60 nations that
have agreed to set up an international aircraft registry to
protect foreign aircraft owners in the event of defaults.
"Lessors and banks will want to see what kind of legal
framework is available. They always want to know: 'Is my
ownership status going to be respected?'" said aviation banker
Bertrand Grabowski, a managing director of Germany's DVB Bank.
Answers to questions such as these may set the tone for tens
of billions of dollars of other investments in Iran.
"One would assume that if they are serious about getting
aircraft in, there will be the ability for creditors to exercise
their rights," AerCap's Kelly said, predicting that this would
be resolved.
In the longer term, Iran's rebound may depend on significant
spending on airports, air traffic control and other
infrastructure: topics also due to be discussed with investors.
"It will take some time. It requires upgrades in
infrastructure...and won't happen from one day to the next. But
I see this as an important point of departure," Grabowski said.