BOEING IN JORDAN - STILL IN A MUDDLE, DESPITE THE

C O N F I D E N T I A L AMMAN 009085

SIPDIS

USDOC FOR 4520/ITA/MAC/ONE/PTHANOS
DEPT FOR EB FOR WAYNE/MERMOUD

E.O. 12958: DECL: 11/08/2014
TAGS: EAIR BEXP JO IZ
SUBJECT: BOEING IN JORDAN - STILL IN A MUDDLE, DESPITE THE
KING'S ENGAGEMENT

REF: AMMAN 07528

Classified By: CHARGE D'AFFAIRES DAVID HALE, REASON: 1.4 (B & D)


1. (C) SUMMARY: In a meeting with visiting Boeing
officials, King Abdullah reiterated his political
commitment to buy Boeing aircraft and his strategic interest
in a mixed fleet of Boeing and Airbus aircraft. The possible
options include a purchase of four 737s by merging transition
start-up costs with those of Iraqi Airways, if Iraq buys
Boeing; in a second alternative, Jordan might purchase two to
four 717s targeting tourist travelers. A third scenario
includes possible purchase of 7E7s in 2007/2008. Financing
remains a challenge. Although the details of some of these
proposals remain sketchy, the King's visit to the U.S. in
early December provides a golden opportunity for top-level
advocacy for Boeing. END SUMMARY.


2. (C) On November 1, visiting Boeing officials Tom
Pickering, Lee Munson, and John Craig, accompanied by Charge,
called on King Abdullah to discuss the latest on possible
purchases of Boeings. Royal Court Minister Samir Rifai was
also present and Prince Feisal joined the meeting in progress.


3. (C) The King showed he was very absorbed by the ideas
offered by Boeing and reiterated both a political commitment
to a Boeing purchase and his own strategic interest in a
mixed fleet. By the end of the meeting, there were three
possibilities on the table for further discussion.


4. (C) Under the first proposal, Royal Jordanian would buy
four 737s and share the start-up and transition costs with
Iraq Airways, assuming Iraq goes with Boeing. A key element
would have Iraq purchasing a flight simulator and putting it
in Jordan, so its pilots could be brought to Amman for
training, and the Jordanians could train for free. By
sharing these costs, Boeing estimated that
Jordan's start-up costs could be cut from $25 million to $10
million. The King was very interested in this possibility,
particularly in trilateral cooperation with Iraq. (Pickering
later conveyed to Charge that Allawi confirmed to him an
Iraqi intent to purchase Boeing and agreement in principle to
include Jordan in the deal. Pickering did not discuss
financing issues for a theoretical Iraq deal with Charge.)


5. (C) However, Prince Feisal interjected that the Airbus
deal was already done (although admittedly not finally
signed). He was loath to back out at the last minute, after
all the ups and downs of the negotiations. He reminded
Boeing that the King had very much wanted to sign with
Boeing, but the inability to close the financing gap--which
Pickering confirmed still existed--had made Jordan turn back
to Airbus after the deadline set by Boeing for the deal had
passed.


6. (C) Although Feisal did not identify a market need for
both 737s and Airbus, the King seemed intrigued. If Jordan's
overall market share expanded because of growth in the
tourist sector, the market could evolve and make a 737
purchase worthwhile. In the end, the King and Feisal agreed
they would be happy to look at any proposal for the 737s, but
preferably before the Airbus deal was to be signed. Prince
Feisal and Royal Court Minister Samir Rifai are to be the
follow-up points of contact.


7. (C) Both the King and Prince Feisal emphasized that
their immediate interest with Boeing was to purchase two to
four 717s, as part of their strategy to promote tourism from
areas within the 1500 to 1800 nautical mile range. Russia
and Eastern Europe were particular targets.


8. (C) There was a general discussion of a purchase of 7E7s
for 2007/2008, but there were no specifics.


9. (C) COMMENT: After the meeting, the Boeing
representatives concluded that they saw no immediate need for
USG advocacy beyond what has already been done, but they
promised to keep the Charge informed. Embassy will continue
to follow up with the Jordanians at the ministerial level.
The King will be visiting Washington in early December and
that will provide the U.S. with another opportunity to
promote Boeing. Prior to the visit, we will need to know
from Boeing what exactly it has in mind for us to advocate.
In any case, further flexibility on financing on Boeing's
part would probably open the door a bit wider on this deal,
if indeed the door is actually ajar.


11. (U) Baghdad minimize considered.
HALE