BAE Systems has formally submitted a bid to build 60 Eurofighter Typhoon jets
for the United Arab Emirates (UAE), stepping up its attempt to strike a deal
that could support thousands of UK jobs and is vital for the company’s
prospects.
The Typhoon programme, developed by BAE, Italy’s Finmeccanica and Airbus–maker
EADS, suffered a major setback last year when it lost out to French company
Dassault for a major contract to supply India with 126 fighter jets.
However, the aircraft has emerged as the favourite to win the UAE contract,
which could be worth around £6bn and has been described as a “game-changer”
by the chief executive of BAE, Ian King.
More than 5,000 people work on the Typhoon project in Britain for BAE, which
is the country’s biggest defence contractor. Securing the UAE deal would be
a major boost to the manufacturing sites in Lancashire where the fighter jet
is constructed.
In a note, UBS, BAE’s house broker, said: “We estimate that this order could
potentially be worth £6bn for the aircraft alone and multiples of that
including training, support and weapons packages.”
The British company is leading negotiations with the UAE on behalf of the
Typhoon consortium. The potential deal is also likely to include a
technology-sharing agreement on unmanned aircraft.
It is thought that the process to decide which aircraft the UAE selects could
take several months. Dassault is also in the running to supply the UAE with
its Rafale jets.
Charles Armitage at UBS said that if a deal is agreed between BAE and the UAE, it could open the door for talks with India to be restarted. He said: “If UAE is signed, this could put pressure on India, which would be the only export customer for Rafale - nobody likes being the only export customer for a programme as it tends to reduce flexibility and increase the upgrade/maintenance costs – and could bring Typhoon back into the picture.”
The group’s chances of securing the order were bolstered by an alliance that was agreed last November, when David Cameron travelled to the Gulf to unveil a formal defence and industrial partnership between Britain and the UAE.
BAE shares closed up 2.3pc at 461.3p on hopes the UAE deal will be agreed.
Charles Armitage at UBS said that if a deal is agreed between BAE and the UAE, it could open the door for talks with India to be restarted. He said: “If UAE is signed, this could put pressure on India, which would be the only export customer for Rafale - nobody likes being the only export customer for a programme as it tends to reduce flexibility and increase the upgrade/maintenance costs – and could bring Typhoon back into the picture.”
The group’s chances of securing the order were bolstered by an alliance that was agreed last November, when David Cameron travelled to the Gulf to unveil a formal defence and industrial partnership between Britain and the UAE.
BAE shares closed up 2.3pc at 461.3p on hopes the UAE deal will be agreed.
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