Boeing and Airbus will lose contracts worth roughly $39 billion to replenish Iran’s aging fleet of commercial planes as part of the Trump administration’s reimposition of sanctions.
“The Boeing and Airbus licenses will be revoked,” Treasury Secretary Steven Mnuchin told a group of reporters Tuesday. “The existing licenses will be revoked.”
The aircraft sales were among the most sought-after contracts for Iran.
In December 2016, Airbus signed a deal to supply national carrier Iran Air with 100 airplanes for around $19 billion at list prices. It has delivered three planes so far, the first new aircraft acquired by Iran in 23 years.
Boeing later inked a deal with Iran Air for 80 aircraft with a list price of about $17 billion, promising that deliveries would begin in 2017 and run until 2025.
The company separately struck a 30-airplane deal with Iran’s Aseman Airlines for $3 billion at list prices. No deliveries have been made yet.
Gordon Johndroe, a Boeing vice president, said in a statement: “We will consult with the U.S. Government on next steps. As we have throughout this process, we’ll continue to follow the U.S. Government’s lead.”
Analysts said the impact on Boeing would be modest because of a backlog of orders for 737 aircraft. Boeing’s stock fell 0.6 percent and closed at $338.37 a share.
Airbus, based in Toulouse, France, is subject to U.S. export restrictions because more than 10 percent of its jet parts originate with U.S. companies such as United Technologies, Rockwell Collins and General Electric.
Mnuchin also said the Trump administration would cancel waivers that allowed the sale of commercial aircraft parts and services.
“These sanctions do impact all of the major industries,” he added. “These are very, very strong sanctions; they worked last time. That’s why Iran came to the table.”
He said there might be some exclusions, but he did not elaborate.
One company hoping for a reprieve is the French oil giant Total, which last year signed a $2 billion contract to develop the South Pars natural gas field. The company said it hoped the deal would be left alone since it was signed according to rules in place at the time.
The administration said it was giving most international companies 90-day and 180-day “wind-down periods” to exit contracts and ventures in Iran.
The sanctions on oil purchases will be the same as under the Obama administration. The State Department will allow purchases by other countries if they show that they are making “significant reductions” over a 180-day period. Under Obama, and with the cooperation of five major economic powers, Iran’s oil exports fell by more than 1 million barrels a day.
The new sanctions might have less effect. Since the nuclear deal was signed and Iran was free to sell oil without restriction, the Islamic Republic has been able to make new sales of 700,000 barrels a day to Asia, led by China and India. It remains unclear how much those nations will comply, if at all.
Mnuchin said U.S. officials have had discussions with other countries about increasing production to offset the loss of oil from Iran. He did not say which countries, but Saudi Arabia has the greatest spare production capacity.
“My expectation is not that oil prices go higher,” he said.