If Trump scraps the Iran nuclear deal, the first loser may be Boeing

Key Points
  • Boeing's deal to sell 110 planes to Iran could be in jeopardy
  • Airbus also may face difficulties with its sales to Iran
  • "It probably would have some impact on the stock," says one aerospace analyst
In this June 2003 file photo, a Boeing 747 Iran Air plane is seen at Mehrabad International Airport in Tehran.
Hasan Sarbakhshian | AP

President Donald Trump is threatening to "decertify" the 2015 agreement that froze Iran's nuclear program — and if he follows through, it could hurt Boeing.

The U.S. aircraft maker has an agreement to sell 80 new planes to Iran Air and another 30 to Iranian carrier Aseman. The total value of those deals is about $20 billion dollars.

Boeing is the best performing stock in the Dow Jones Industrial Average over the last year, doubling the performance of its nearest competitor. "If Boeing isn't able to deliver the airplanes to Iran, it probably would have some impact on the stock," said Cowen aerospace analyst Cai von Rumohr.

Despite any potential problem, he upped his price target on the stock last week to $315 dollars a share, almost 25 percent higher than it is now. "This could be a bigger issue for 2019 than for 2018," he said.

The reason is that Boeing is oversold for next year, meaning the manufacturing giant would likely be able to sell those planes to another carrier if the Iran deal falls through. However, according to von Rumohr, Boeing has sold just 90 percent of its 2019 inventory, meaning it could get stuck with extra planes.

If President Trump does decide to "decertify," the nuclear deal — which would essentially remove the United States from the agreement — it's still unclear what would happen after that. Decertification would not necessarily mean all business ties are off. Europe and Asia have growing business ties with Iran, and officials from both continents are urging the U.S. to stay in the deal.

However reports quoting Iran's foreign minister Mohammad Zarif late last week stated that if the U.S. leaves the deal, Iran could also exit, meaning the situation could revert to where it stood before the landmark agreement was signed in 2015.

The next step

"As we have throughout this process, we continue to follow the lead of the U.S. government in all our dealings with approved Iranian airlines," a spokesman for Boeing told CNBC. But if the Iran nuclear agreement is canceled, those rules and regulations are still very unclear.

CNBC reached out to several members of the U.S. Senate to see if decertification would lead to a reinstatement of the economic sanctions that went away after the nuclear agreement, but received no response.

A common concern in defense circles is that Iran could take the passenger planes and convert them into troop carriers or weapons transporters for its army or to aid its key ally in the region, Hezbollah.

'The potential to build bridges'

Iran is starved for new airplanes. Sanctions have led to a deterioration of the country's aging passenger fleet. The Iranian government has blamed those sanctions on several plane crashes in the Islamic Republic.

If Boeing is forced to back away from the Iranian market, "it would not be good for Boeing, but they'll certainly be able to keep the show on the road," said Vertical Research aerospace and defense analyst Robert Stallard. "Boeing survived 30 plus years without the Iranian market."

An Iranian Aseman Airlines' Fokker 100 takes off as an Iran Air aircraft is seen in the foreground at Tehran's international airport.
Morteza Nikoubazl | Iran

Another analyst covering the company said he believes the stock may see a minor blip but would quickly recover.

"Boeing has mitigated the risks to decertification," according to Jefferies' Howard Rubel. But he said it would be a missed opportunity if the Boeing sales are halted. "A deal has the potential to build bridges."

It's worth noting that when President Richard Nixon first visited China in 1972, a sale of Boeing aircraft to that nation quickly followed.

Iran also has deals with European aircraft giant Airbus, and that company delivered several planes to Iran Air earlier this year. Further deliveries could be in jeopardy, however, because Airbus does a lot of business in the United States and has a plant in Alabama, meaning the company could face scrutiny from the U.S. government.