Tehran seeks to privatise national airline

Iran’s government hopes to privatise Iran Air soon for more than $1.5bn to help the embattled national flag-carrier circumvent US sanctions that bar it from buying aircraft and spare parts.

Farhad Parvaresh, the airline’s managing director, said he expected the sale of the lossmaking airline to be pushed through within two months, although he admitted he did not know yet whom the purchaser would be.

The tightening of sanctions has caused the government of President Mahmoud Ahmadi-Nejad to speed up disposal of the airline, which was first slated for sale in 2007 under a national plan to cede control of most government companies to the private sector.

Mr Parvaresh said in an interview: “When Iran Air is privatised, our hands will be more open in dealing with sanctions and buying aeroplanes and spare parts.”

The government’s privatisation organisation has put the value of 50 per cent plus one shares of Iran Air at about $1.6bn. Analysts speculate the majority stake would be bought by one company or a consortium of quasi state-owned companies.

Emir Hamooni, the director of Tehran bourse’s off-exchange trading, where the shares of lossmaking companies are floated, said he expected the sale to happen on September 20.

Iran Air has been battling sanctions since the 1990s, when the US stopped Tehran buying civil aircraft, spare parts and post-sale services, supposedly to stop the Islamic regime from accessing militarily useful technology. Washington went further in June this year by prohibiting any transactions with the national airline because of Iran’s alleged pursuit of nuclear weapons.

The pressure on Iran Air has increased further during the past year because it has not been able to refuel in European states, where fuel suppliers are nervous of angering the US.

Mr Parvaresh denied any Iran Air passenger aircraft were involved in military operations. He said: “How can we fit weapons into a civilian aeroplane with 200 passengers and 200 suitcases?”

Iran’s ageing aircraft fleets and shortages of spare parts are believed to be the main reason the country’s civil aviation is among the world’s riskiest. More than 700 Iranian passengers have been killed in 13 aircraft crashes and other incidents over the past six years, according to an Financial Times count of local media reports.

Some of Iran Air’s 52 aircraft date back to before the 1979 Islamic revolution and the fleet’s average age of 21.5 years – in line with the average for all Iranian civil aircraft – is seen as too high.

Iran’s national development plan urges the government to reduce the average age of its aircraft to 15 years by 2015, while aviation experts say the country needs at least 150 more to replace some of the current 196 aircraft over the next five years and improve its flight safety record.

The International Civil Aviation Organisation has criticised Washington’s sanctions for affecting the safety of civilian flights, while many Iranians – regardless of whether or not they support the Islamic government – consider the US measures against civilian aviation criminal.

“Imposing sanctions on a civilian airline is simply inhumane,” said Mr Parvaresh. “It is 50 years since Iran Air has been flying to such destinations like Frankfurt and London without any record of unprofessional behaviour.”

The sanctions build on the memory of the 1988 shooting down by the US of an Iran Air Boeing, killing all 290 passengers on board.

One former Iranian government official said: “Unlike what the US claims, its intention is to harm ordinary people.”

Iran Air has resorted to middlemen to buy spare parts and second-hand aircraft, as have the country’s 15 quasi-private airlines. This is believed to be done mainly through Turkey, but also through the United Arab Emirates, Ukraine and central Asian states.

That process has meant that aircraft and parts cost Iran Air between 10 to 30 per cent more than market rates, Mr Parvaresh said. But he insisted that “major American and European companies such as Boeing and Airbus are bigger losers than we are, as Iran could afford to buy 100 planes from them now”.

Mahan Air, Iran’s second-largest airline, which is credited with the country’s best flight safety record, has turned into an example of how a “private” airline can successfully skip sanctions by renting or buying Airbus aircraft, albeit at a high cost.

When privatised, Iran Air hopes to expand its domestic and international flights, with the help of loans from the National Development Fund. It will also no longer have to fly routes that are not economically viable.

Source: FT.com