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Iran Air, the Islamic Republic’s state carrier, has signed a memorandum of understanding with Boeing Co. for narrow and wide-body aircraft in the first transaction by the U.S. plane maker since sanctions were lifted in January.

The purchase includes a mix of 737 and 777 models, Iran Air said in a statement on its website. The carrier will obtain the planes through a lease purchase, pending clearance from the U.S. and Iran. In a separate statement, Boeing confirmed that an initial agreement had been reached, adding that “any and all contracts with Iran’s airlines will be contingent upon U.S. government approval.”

The country intends to buy 100 jetliners from Boeing, Ali Abedzadeh, director of Iran’s Civil Aviation Organization, said in a newspaper interview earlier this week. There were no details on the total figure in Tuesday’s statements.

The agreement follows a $27 billion order by Europe’s Airbus Group SE in January. The plane manufacturers are competing in one of the few remaining untapped jet markets as a weak global economy saps demand in other regions. Iran says it needs 400 long-range and 100 short-range jets and sees $50 billion in aircraft investments after years of sanctions left its aging fleet in dire need of upgrading.

Expansion Plans

Iran Air, the country’s biggest carrier, currently serves 27 domestic and 29 international routes, needs the upgraded aircraft as it rolls out a 10-year plan aimed at moving from survival mode to expansion. The airline, whose aging fleet includes 747s and Fokker NV 100s, is planning to reinstate long-haul routes such as Tokyo and Seoul that were halted under sanctions once it gets the wide-bodies to make those flights.

Plane deals with Iran are not without risks. The companies must address sanctions that prohibit banks from dollar-based transactions with Iran. Boeing must additionally take into account a political backlash in the U.S., given Iranian leaders’ penchant for anti-American rhetoric.

This article was written by Deena Kamel Yousef and GOLNAR MOTEVALLI from Bloomberg and was legally licensed through the NewsCred publisher network.

Photo Credit: An Iran Air Boeing 747 jet at Frankfurt International Airport. wilco737 / Flickr