Boeing and Airbus will have $39 billion worth of Iranian contracts "revoked" after President Donald Trump's decision to leave the Iran nuclear deal and reimpose sanctions.
President Donald Trump's decision to remove the US from the Joint Comprehensive Plan of Action, better known as the Iran nuclear deal, rocked the geopolitical landscape.
The decision also carries significant ramifications for the US economy and some of the world's largest manufacturers. In particular, aircraft makers Boeing and Airbus will miss out on a major financial opportunity because of the decision.
In 2016, two companies signed deals worth a combined $39 billion with various Iranian airlines to help update the country's aging fleet.
Treasury Secretary Steven Mnuchin told reporters Wednesday that the Boeing and Airbus deals "will be revoked."
Airbus will bear the most immediate hit since the company already began delivering aircraft to Iran. The manufacturer signed a $19 billion deal with Iran Air for 100 planes in late 2016.
While Airbus is a Europe-based firm, the company is still subject to the Iranian sanctions, since more than 10% of their parts are made in the US. The company was cautious in a statement on Wednesday.
"We're carefully analyzing the announcement and will be evaluating next steps consistent with our internal policies and in full compliance with sanctions and export control regulations." the statement said.
While Boeing did not begin deliveries to Iran, the US aircraft maker is also set to miss out on a considerable opportunity.
Boeing signed two deals with Iranian carriers: a $17 billion contract with Iran Air and another $3 billion deal with Aseman Airlines. Boeing would have delivered 110 planes between the two deals.
Despite the probable contract termination, Boeing's substantial backlog of orders and strong profits mean the loss won't be a huge blow to the company. In a statement, Boeing said that the company would "consult" with the US government on how to move forward.
"As we have throughout this process, we’ll continue to follow the US government’s lead," the statement said.
The airline deals' collapse are indicative of a broader economic fallout from Trump's geopolitical move. Mnuchin said oil companies would get a 180-day window to exit existing contracts in Iran before sanctions were reapplied.
Due to the crackdown on Iranian oil exports, economists and analysts estimated that Trump's decision on the nuclear deal will boost crude oil prices and eventually lead to Americans paying more at the gas pump.
Mnuchin attempted to allay concerns of an oil price bump on Tuesday, saying there were "agreements in place" to make up for the lost Iranian oil.