September 18, 2016 / 12:46 PM / 3 years ago

Iran mulls joining Cape Town aviation finance pact: minister

TEHRAN (Reuters) - Iran may adopt a key international agreement that would protect the rights of foreign leasing companies as it seeks to renew its elderly fleet of passenger jets, the country’s transport minister said on Sunday.

The 2001 Cape Town Convention makes it easier to attract foreign leasing companies by protecting their rights to re-possess aircraft if airlines go bankrupt and is widely considered a benchmark for the international jet market.

“We are studying that. If we come to a (positive) conclusion, we will certainly process it,” Roads and Urban Development Minister Abbas Akhoundi told Reuters in an interview on the sidelines of the CAPA Iran Aviation Finance Summit.

Deputy Roads and Urban Development Ashgar Fakhrieh said the ministry was in the process of getting internal approval to join the pact, subject to a decision in parliament.

Industry sources say a decision to adopt the agreement could make it easier to finance aircraft deals, including a provisional deal to buy more than 100 jets from Airbus.

To finance the deal, Iranair is expected to sell most of the jets to two leasing companies and buy them back.

Two people familiar with the matter said the airline is in advanced negotiations with leasing company Dubai Aerospace for the bulk of the deal. The company declined to comment.

The Cape Town pact also allows airlines to receive Western export credit for new aircraft at discounted rates.

However, a raft of other regulatory and financial hurdles remain before the Airbus deal, or a similar aircraft purchase from Boeing, can be finalised as many banks remain wary of the legal risks of doing business in Iran.

Reporting By Tim Hepher; Editing by Noah Browning and Raissa Kasolowsky

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