BAE Hopes India May Reverse Fighter Decision
LONDON — British arms manufacturer BAE Systems said Feb. 16 it held out hope that India may reverse its decision to negotiate a mega-contract for 126 fighter jets exclusively with France’s Dassault Aviation.
In a lackluster earnings statement, BAE said it still felt a deal with India could bounce its way despite a shock decision from the former colony long seen as a privileged partner for Britain.
India announced in late January it had selected Dassault, builder of the Rafale, over BAE as the preferred bidder in a contract estimated to be worth $12 billion (9.1 billion euros).
The Eurofighter Typhoon project, which had been seen as the frontrunner, involves BAE and companies in Germany, Italy and Spain.
If concluded, the contract would mark the first time the Rafale had found an export partner, despite being in service with the French military since 1998 and having proved itself in several conflicts.
France is confident that it can sign and seal a firm deal to supply India the jets within six to nine months.
But BAE, which owns 33 percent of the Eurofighter project, said it would keep fighting for the India deal.
“The program has a long way to go before a contract is awarded and we continue to actively support the bid,” BAE said in its earnings statement.
BAE Systems CEO Ian King added that the consortium partners were exploring all options including a discount on the aircraft, though he added there were limits on how far the consortium would go.
Howard Wheeldon, an independent defense and aerospace analyst, predicted “a long running contest.”
“Eurofighter Typhoon has still got a very credible chance of pulling this back,” he said.
The main question “is whether France and Rafale can meet the commitments that they have made of in terms of industrialization and technology transfer commitments to India,” Wheeldon said.
Britain and Eurofighter already have a lot of experience in this domain, Wheeldon said, and could use this to wrench India away from the Rafale.
In the days following the announcement, French President Nicolas Sarkozy underlined the significant transfers of technology in the deal.
The big stakes deal with India may cloud a Franco-British summit in Paris on Feb. 17. Tensions between France and Britain have been high lately, mainly on European issues.
The pressure is on BAE to expand its market with old customers Britain and the United States slashing defense spending.
BAE sales in 2011 sank 14 percent as cash-strapped governments axed spending on defense and security, and the company’s order book shrank to £36.2 billion.
Earnings rose 18 percent last year but only thanks to one-off items such as a research-and-development tax credit and through axing 22,000 jobs out of a global workforce that at one time numbered more than 120,000.
Looking beyond the setback in India, BAE said successful conclusion of negotiations for a crucial Saudi Arabian fighter jet contract would underpin earnings growth this year.
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