Bombardier eyeing 'significant opportunities' in Iran

Bombardier, the Montreal-based manufacturer of planes and trains, is exploring how to get in on Iran's post-sanctions marketplace, the CBC's Middle East correspondent Derek Stoffel writes.

Montreal-based manufacturer faces hurdles for selling aircraft, trains to Islamic Republic

Bombardier sees opportunities in Iran for its single-aisle regional jet and the longer range C Series plane, which would allow Iranian carriers to operate domestic routes and flights throughout the Middle East. (Ryan Remiorz/Canadian Press)

From construction to cosmetics, global multinational corporations are eagerly eyeing the marketplace in Iran now that American and European sanctions related to Tehran's nuclear program have been lifted.

Bombardier, the Montreal-based manufacturer of planes and trains, is exploring how to get in on that market, despite facing challenges that confront all Canadian businesses looking to deal in Iran.

A source tells CBC News that Bombardier officials have made two visits to Iran in the past six months to assess the business climate in anticipation of the post-sanctions world.

Business has suffered in the main market in Tehran because of more than 10 years of international sanctions. (Derek Stoffel/CBC)

Bombardier would not confirm these trips, saying it does not comment on its global campaigns.

But it's clear the manufacturer, which employs 74,000 people around the world, is interested in doing business in the Islamic Republic.

"We do have a commercial aircraft forecast and strategy team that's been taking into account significant opportunities in Iran," said Marianella Delabarrera, the communications manager for Bombardier's commercial aircraft division.

Iran's fleet of passenger jets — estimated to number around 250, according to the state-owned Press TV agency — is in bad shape. Sanctions forced Iranian airlines onto the black market to find parts to repair their planes.

The poor state of aircraft has been a factor in some of the nine fatal crashes involving Iranian commercial airlines since 2000, which have left nearly 600 people dead, according to the Airline Safety Network.

Need for 'major fleet renewal'

The state-run news agency Mehr said Iran will require nearly 600 new aircraft over the next decade.

The European-based manufacturing consortium Airbus announced a deal to sell 114 aircraft to the state carrier Iran Air on Saturday.

Bombardier's transportation division is looking into any market opportunities around upgrades to rail services in the Iranian capital of Tehran. (Bombardier Transportation)

Bombardier's Delabarrera said her company sees opportunities in the single-aisle regional jet and the longer range C Series plane, which would allow Iranian carriers to operate domestic routes and flights throughout the Middle East.

"There is definitely a requirement for a major fleet renewal and growth strategy in the country," she told CBC News in a telephone interview from Toronto.

New aircraft sales would help Bombardier, which received a $1-billion lifeline from the Quebec government last year.

Iran's capital, Tehran, is also upgrading its rail services, and Bombardier's transportation division is also looking into that market.

But Bombardier, like all Canadian companies, faces hurdles in accessing the Iranian marketplace.

Canadian sanctions

The former Harper government closed the Canadian Embassy in Tehran in 2012, leaving no Canadian trade officials in the country to help businesses navigate Iranian regulations and market conditions.

While the United States and Europe have lifted sanctions related to Iran's nuclear industry, Canada has not.

The Canadian Embassy in Tehran was shut by the federal government in 2012. (Derek Stoffel/CBC)

A wide range of Canadian sanctions remains in place, prohibiting the trade of anything related to Iran's nuclear or conventional weapons industry. The measures also block most Canadian trade in a wide variety of industries, including oil and gas, transportation and communications.

Global Affairs Canada said a review of Canada's sanctions regime is underway. Federal ministers have hinted that will happen sooner rather than later, so Canadian businesses aren't left out in the cold.

Bombardier will keep watching for movement on sanctions, but Delabarrera said the company will continue "looking and forecasting and strategizing. But with respect to any movement or actual pushing forward on opportunities, we're not there just yet."

Iran's president, Hassan Rouhani, is expected to visit France and Italy next week to build better economic ties with those two countries.

Cautious expansion

And business consultants focusing on Iran report long lists of trade and business delegations heading to Tehran in the coming weeks and months.

Iranian investors check out market prices at the country's stock exchange in Tehran in June 2015. (Derek Stoffel/CBC)

But one longtime emerging markets expert said even the largest companies interested in expanding into Iran are doing so cautiously.

"They mainly have concerns about the legacy of sanctions — the fact that the U.S. Congress is still very openly antagonistic against Iran and they don't want to seem to be making a very high profile push into Iran as soon as the door is open," said Chris Weafer, a senior partner with Macro-Advisory in Moscow.

On Sunday, after the international deal limiting Iran's nuclear program came into force, the United States slapped a new round of sanctions on Iran relating to a recent round of ballistic missile tests.

Still, most industry analysts agree that the business face of Iran is in for a big change.

The Golden Arches and other symbols of Western capitalism are absent when driving around Tehran. Instead, knock-offs abound.

But it's likely not too long now until the Mash Donalds burger joints and the Pizza Hat outlets are replaced by the real thing.


Derek Stoffel

World News Editor

Derek Stoffel is a former Middle East correspondent, who covered the Arab Spring uprisings in Tunisia, Egypt and Libya and reported from Syria during the ongoing civil war. Based in Jerusalem for many years, he covered the Israeli and Palestinian conflict. He has also worked throughout Europe and the U.S., and reported on Canada's military mission in Afghanistan.


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