Iran sanctions partially lifted as the watchful eye of the EC focuses elsewhere

TESTCustomwebLP TESTCustomwebLP
By TESTCustomwebLP TESTCustomwebLP April 7, 2014 15:16

Iran sanctions partially lifted as the watchful eye of the EC focuses elsewhere

As reported would be the case here not 12 months ago the US Treasury has granted OEMs a licence to export spare commercial parts to Iran.

General Electric confirmed late on Friday that it has clearance to overhaul 18 engines sold to Iran in the late 1970s and the work will be carried out at work GE facilities and MTU Aero Engines.

Iran Air remains in a US OEM timelock from 1979 when sanctions were imposed and its 747s and other aircraft urgently require parts and overhaul. However no new aircraft are allowed to be sold to Iran at this time, so the barn door on mass orders of new aircraft remains closed at this time. If sanctions were to be fully lifted it is likely that Iran would turn towards Airbus before Boeing.

The European Commission is focusing on other matters at this time as it examines several foreign holdings in European airlines to see if they comply with rules. Under investigation is Delta’s stake in Virgin Atlantic, Etihad’s stake in Air Berlin, Korean Air’s stake in Czech Airlines and HNCA’s 35% stake in Cargolux. The investigation will focus on who is effectively controlling the European airlines given that all stakes are below the 50% threshold. The Commission has asked for information to be provided on how these investments comply with the rules on ownership and control of European airlines.

This is a significant turn of events given that Etihad is in the final stages of trying to reach an agreement to invest in Alitalia. There can be no doubt that of all the airlines mentioned Air Berlin is the one airline that does indeed seem to be treading the line of control very finely. Indeed Etihad owns 29.2% of Air Berlin, which is Germany’s second-largest airline, but is struggling with debts and has twice postponed the publication of its 2013 results. Etihad has provided loans to Air Berlin and bought a majority stake in its frequent flyer program.

There can be no question that Etihad will need significant controls over Alitalia if any investment is to work.

It seems the timing of this European Commission investigation is no coincidence at all and the EC is sending a clear warning shot to foreign airlines that it is watching closely. The EC, when it comes to aviation matters, is much like a jack in the box, you know it is going to spring into action at some point if you wind it up, but it never seems to spring into action at the same time twice, which is why so many corporations get caught out. Beware, as this story has the potential to cause significant airline industry upset in the near future which could well burn some investors.

One airline stock that is powering ahead though is Alaska Air Group (ALK). ALK is on a big expansion drive in 2014 and is already reporting a 4% increase in passenger numbers and it is likely that quarterly figures will flatter the airline as it will be one of the few majors not affected at all by US East coast weather disruption. This airline stock more than any other right now looks like the one that will both beat earnings estimates and in the process provide a fast buck to investors.

TESTCustomwebLP TESTCustomwebLP
By TESTCustomwebLP TESTCustomwebLP April 7, 2014 15:16
Write a comment

No Comments

No Comments Yet!

Let me tell You a sad story ! There are no comments yet, but You can be first one to comment this article.

Write a comment

Only <a href="http://www.aviationnews-online.com/wp-login.php?redirect_to=http%3A%2F%2Fwww.aviationnews-online.com%2Feditorial-comment%2Firan-sanctions-partially-lifted-as-the-watchful-eye-of-the-ec-focuses-elsewhere%2F"> registered </a> users can comment.