Boeing (NYSE: BA) has finalized terms to sell 80 of its newest commercial aircraft to Iran’s state-run airline in a deal said to be worth $16.6 billion at list prices. Iran Air will take delivery of 30 of the company’s 777 widebody aircraft, with orders evenly split between the 777-300ER (extended range) and the 777X. Another 50 737 Max single-aisle planes will help fill out the carrier’s aging fleet, which had consisted of mostly older Airbus planes and one widebody 747.
The deal could face opposition from the soon-to-be-installed administration of President-elect Donald Trump, who openly opposed the Obama administration’s nuclear nonproliferation deal with Iran, which lifted the long-standing sanctions that had prevented Boeing and other American companies from doing business there. Trump has already taken Boeing to task for the price it’s charging under its contract to design and build a pair of new Air Force Ones, the heavily modified, military-grade 747s that safely ferry U.S. presidents around the globe.
Specifically, the President-elect took to Twitter to proclaim that costs on the Air Force One contract are “out of control” and proclaiming the government should “cancel order.” So far, neither Trump nor members of his transition team have spoken out on the Iran Air deal. Even so, investors appear concerned he will sabotage the agreement upon taking office; shares of Boeing stock have barely budged in the days since the news broke, and are lagging the market year-to-date.
What to do now? Bold investors may want to buy to hold, if only because history shows Trump can be more flexible with big business than his rhetoric would suggest. For example, shortly after AT&T announced plans to buy Time Warner for $107.50 per share, candidate Trump came out against the merger on the grounds that it represented an unacceptable concentration of power into the hands of a few executives. President-elect Trump has since dispatched members of his transition team to reassure AT&T that a deal could go through. That same team could quietly approach Boeing and work out an understanding over both the Air Force One contract and its dealings with controversial foreign powers such as Iran, and in response, propel the stock back into market-beating territory.
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