Blow for Britain and BAE Systems as UAE rules out Eurofighter deal

Defcon 1

Senior Member
Nov 10, 2011
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Britain fails to seal multi-billion pound deal to sell 60 Eurofighter Typhoon jet fighters to the United Arab Emirates

Defence contractor BAE Systems has been hit by a double-blow from the Gulf over its Typhoon fighter jet programme, damaging its export ambitions and forcing the company to warn on profits.

In a major reversal, announced after the market closed, BAE said the United Arab Emirates had ended protracted negotiations over a potential order worth up to £6bn for around 60 of the supersonic aircraft – despite the personal intervention of Prime Minister David Cameron.

The defence group also disclosed that, for the third year running, it had failed to agree the price for 72 Typhoons for Saudi Arabia, reducing this year's forecast earnings per share by "6p-7p" – equivalent to about £250m off operating profits, according to analysts. They had been expecting 43p of earnings.

BAE shares, which had closed up 7.9 at 442p before Thursday's announcement, dropped 4pc when trading began on Friday.

UAE's decision to balk at buying Typhoons is a major setback for BAE, which was hoping to make the Gulf principality its fourth export market for the jet after Saudi Arabia, Oman and Austria.
In a blow for British jobs and exports, the defence group said: "BAE Systems and the UK Government have been in discussions with the Government of the United Arab Emirates regarding a range of defence and security capabilities including the potential supply of Typhoon aircraft. The UAE have advised that they have elected not to proceed with these proposals at this time."
BAE insisted that "recognising the risk, scale and complexity of such a transaction, the group had not built this prospect into its planning assumptions".

However, senior BAE executives had been extremely hopeful of winning a contract that would have guaranteed around two more years work for its production and assembly facilities at Salmesbury and Warton in Lancashire. The current Typhoon workload only extends to 2018, while fresh orders also bring contracts for the Hawk training jet.

BAE was lead negotiator for the UAE contract within the pan-European Eurofighter consortium, whose other members are Italy's Finmeccanica and Airbus-maker EADS, representing Germany and Spain.

A BAE spokesman said: "We put a world-class proposal on the table, but the UAE has elected not to proceed at this time." The company added: "BAE stands ready to work with the UAE to address any future requirements."

The setback is an embarrassment for Mr Cameron, who on a visit to Dubai last month said Britain was "in the running" to sell the Typhoon to the Middle East.

Speaking as the Eurofighter faced competition from French rival Dassault and its Rafale aircraft, Mr Cameron said he was continuing to "support Typhoon around the world, which is doing extremely well and is clearly in the running here as well, so there's a lot of jobs, a lot of investment to be garnered from visits like this".

Mr Cameron also visited the UAE in November last year, when a spokesman for Number 10 issued a statement saying: "The UAE, Saudi Arabia and Oman have all expressed an interest in purchasing Typhoons and the Government is aiming to secure sales of more than 100 aircraft to the region in the coming year, deals that together would be directly worth over £6bn pounds to British firms."
A Government spokesman last night denied that the UAE decision was in any way related to Britain's "no" vote on military intervention in Syria, saying: "This was a commercial decision. It was always going to be a difficult deal to do. And as BAE have said, it was an exciting prospect but not part of their business plan."

The spokesman added that "the Government continues to support BAE Systems in their efforts to win further export orders", noting that the "Typhoon is a world-leading capability" that had been selected by seven Air Forces - the Eurofighter members and the three export markets.

"We continue to have a strong bilateral relationship with UAE that delivers jobs and growth in both countries, for example following the Prime Minister's last visit in November both Emirates and Etihad airlines placed large orders for Airbus aircraft worth more than £5bn to the UK economy," the spokesman said.

Zafar Khan, an analyst at Societe Generale, cautioned that he had never seen Typhoon as favourite for the UAE deal.
"My feeling is that the UAE have a very strong relationship with the French and the current fleet has a lot of Mirage jets in it. So I had always felt that UAE was likely to veer towards the Rafale," he said.

BAE's ongoing failure to agree a step-up in prices for 72 Typhoon jets for Saudi Arabia, under the "Salam" contract first negotiated in 2007, will hit this year's profits. BAE said "the group's focus in these negotiations continues to be on agreeing appropriate terms and not the timing of such an agreement". But the stand-off is a setback for BAE chief executive Ian King, who said in August: "We do expect we will close this out in the second half of this year," noting that the Saudis were now talking about increasing the order "beyond the 72". BAE has so far delivered 28 aircraft under the contract and stressed that Saudi Arabia had continued to sign contracts with the company relating to the Typhoon order. They include a £3.4bn deal, running to 2016, for the provision of manpower, logistics and training to the Saudi air force.

BAE said its relationship with Saudi Arabia "remains excellent", noting it had agreed £1.5bn of contracts this month for the "supply of guided weapons and Tornado maintenance and upgrades". A BAE spokesman said the after-hours announcement was due to having not been "notified by the UAE government" until Thursday afternoon.

Rafale back to the front line now. @Drsomnath999
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Senior Member
May 25, 2009
This actually opens up the market for other aircraft too, not just Rafale.


lord of 32 teeth
Senior Member
Jun 17, 2011
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@Defcon 1

i think the ball is now on india' court for Dassault

if they manage to sign the deal with india ,

then it would open chances for rafale in UAE / Malaysia also , as they all are waiting for india's final acceptance for the rafale deal.

which makes them assured for rafale's production pipeline would continue & also for joint training purpose .

dassault didnt mind for brazil lose for rafale

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Tihar Jail
Dec 20, 2013
UAE is eyeing for F-35 and would even try to get technology transfer from Americans .Israelis for sure would oppose such deal but what Americans needs is hard cash which the UAE would give but not the Israelis , who wants everything in free on American taxpayer money.

By the way EU is letting UAE nationals without Visa which i think more or less depends on the fighter plane deals .
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