SYRIAN AIR TO SELL ALL BOEING AIRCRAFT

C O N F I D E N T I A L DAMASCUS 000661

SIPDIS

STATE FOR NEA/ELA, EB/ESC/TFS
COMMERCE FOR BIS/CHRISTINO
NSC FOR ABRAMS/MCDERMOTT
PARIS FOR JORDAN
LONDON FOR TSOU

E.O. 12958: DECL: 09/18/2018
TAGS: EAIR ECON ETRD PGOV FR SY
SUBJECT: SYRIAN AIR TO SELL ALL BOEING AIRCRAFT

REF: A. DAMASCUS 646

B. DAMASCUS 599

C. DAMASCUS 438

D. DAMASCUS 70

E. 07 DAMASCUS 950

Classified By: Charge d'Affaires Maura Connelly for reasons 1.4(b,d)

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Summary
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1. (C) Syrian Air executives report that the airline's
management intends to sell its two Boeing 747s and six Boeing
727s rather than attempt to overhaul them. They reported
that the one remaining operational Boeing aircraft in the
Syrian Air fleet, a 747, will be grounded on October 1, 2008,
and expressed frustration at the U.S. export license
application process. Syrian Air's Technical Director
revealed that the airline had paid Lufthansa to overhaul one
Airbus A320 engine in Germany, and after completing the
overhaul Lufthansa had subsequently refused to re-export the
engine back to Syria without a U.S. export license.
Currently, Airbus executives are reportedly in Damascus to
conclude a "strategic cooperation" agreement with the SARG
resulting from President Sarkozy's recent visit to Damascus.
End summary.

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Last Syrian Air Boeing to be Grounded
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2. (C) In a conversation that arose from a chance encounter
at a Ramadan social event, Syrian Air Technical Director
Mohiedin Issa told us on September 17 that one of Syrian
Air's two Boeing 747s (tail number YK-AHA) had been grounded
in January 2008 after it could no longer be certified for
commercial use without a "D-check" airframe overhaul. He
said that Boeing had granted Syrian Air,s second 747
(YK-AHB) an extension of an additional 1000 flight hours, but
this plane would also be grounded when the extension expired
on October 1, 2008.

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No Longer Interested in D-Check Licenses
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3. (C) Issa verified the planes were airworthy enough to be
flown to Saudi Arabia where Boeing subsidiary Al Salam
Aircraft Co. could conduct the D-checks. However, he said
that Al Salam is only capable of performing airframe
overhauls and not engine overhauls, which Syrian Air's 747s
also now required. Syrian Air's board of directors had
decided that the likelihood of receiving U.S. export licenses
for engine overhauls was so slim that they saw no reason to
invest in overhauling just the airframes.


4. (C) In a September 18 follow-up telcon with Emboff,
Director General of Syrian Air Ghada Latif confirmed that
Syrian Air is no longer interested in maintaining its Boeing
fleet and intended to sell both 747s and its six 727s (which
have been grounded for some time).

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Lufthansa Refusing to Re-export Airbus Engine
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5. (C) Issa said Syrian Air's top priority is overhauling
four engines for its fleet of six Airbus A320 aircraft. He
revealed that Syrian Air had sent one engine to Lufthansa
Technik in Germany and paid for the overhaul, but Lufthansa
had subsequently refused to ship it back to Syria without a
U.S. export license. He said that Syrian Air had three more
Airbus engines in need of overhaul, but was waiting to see if
Lufthansa could obtain an export license and ship the first
engine back to Syria before sending the other three to
Germany.

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Airbus Executives in Damascus
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6. (C) As reported in ref A, local and regional media are
reporting that Airbus executives are currently in Damascus
concluding what DPM Dardari characterized as a "strategic
cooperation agreement" with the SARG. The informed consensus
is that Airbus will initially attempt to lease two to six
aircraft to Syrian Air indirectly through a private
third-party -- rumored to be head of Syrian Arab Red Crescent
Dr. Abdul Rahman Attar (who is a possible cutout for Rami
Makhlouf) -- in order to circumvent U.S. sanctions law. The
SARG is expected to formally place an order to purchase 14
aircraft to be delivered between 2010 and 2016, with an
option to buy another 36 airplanes until 2028.

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Comment
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7. (C) As the Sarkozy visit demonstrated, Syrian Air,s
continued operation is important to the regime. Now that
Syrian Air is no longer interested in pursuing the 747
D-check licenses, our ability to leverage SARG interest on
our key issues is diminished. Our efforts to pressure the
SARG through withholding safety-related licenses may have
inadvertently strengthened Makhlouf's hold on the Syrian
airline industry and encouraged Airbus' apparent willingness
to subvert U.S. sanctions. However, if Lufthansa actually
requires a U.S. export license to re-export the overhauled
A320 engine to Syria, Issa's concern presents us with a
potential lever.
CONNELLY