US embassy cable - 04AMMAN9085

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