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The decision by Germany to cancel a multibillion-euro order for Eurofighter Typhoon jets on Wednesday leaves Europe's largest defense program even more reliant on a shrinking band of potential buyers in the Middle East and Asia.
Germany had initially pledged to buy up to 250 of the advanced fighters but, like others in the four-nation consortium that funded the jet, has opted to cut orders because of domestic budget pressures.
The makers of the Eurofighter, including BAE Systems BA.LN -0.18% PLC, Airbus Group EADSY -0.88% NV DICO.AE -0.42% and Finmeccanica FNC.MI -1.77% SpA, hope to win orders from countries including Saudi Arabia and Malaysia to keep their production lines going beyond 2018.
BAE said Wednesday that it had secured a long-awaited deal with Saudi Arabia on the final pricing of 72 Typhoons ordered in 2007, raising hopes for a follow-on deal for more aircraft.
The Eurofighter consortium is waging an intense battle for overseas orders with jets made by Lockheed Martin Corp. LMT -0.03% , Boeing Co. BA -1.71% and France's Dassault Aviation SA, AM.FR -1.39% alongside makers of cheaper fighters such as Sweden's Saab SAAB-B.SK +0.67% AB, which last year beat its larger rivals to win a $4.5 billion order from Brazil.
Germany and the U.K. originally planned to each buy 250 Eurofighters, but have steadily reduced their commitments and alongside partners Italy and Spain agreed in 2009 to split their final orders into two tranches.
Stéphane Beemelmans, Germany's deputy defense minister, told a parliamentary meeting on Wednesday that Germany has canceled the second tranche of 37 jets valued at €3.5 billion, according to a parliamentary official who attended the meeting and declined to be identified. A government official confirmed the decision. Germany flies 107 Eurofighters and has another 36 on order.
Eurofighter and Airbus Group, which handles the German Eurofighter contract, said they hadn't been told of a government decision, and other suppliers such as engine maker Rolls-Royce RR.LN +2.41% PLC declined to comment.
"I wouldn't hold my breath for more orders from the four [consortium] nations," said Douglas Barrie at the International Institute for Strategic Studies, a London-based think tank.
BAE announced the long-awaited deal with Saudi Arabia on the eve of its 2013 earnings report Thursday. Europe's largest defense contractor by revenue said the pact would keep its 2013 results broadly in line with previous guidance for double-digit growth in underlying earnings for the full year.
Analysts remain doubtful whether Saudi Arabia will buy more Typhoons after opting not to set up a domestic assembly line for the jets and signing a larger-than-expected deal to acquire Boeing F-15 fighters.
"When they decided not to build an in-country line, that probably capped the total at 72," said Richard Aboulafia, analyst at the Teal Group, a U.S. aerospace consultant.
—--Daniel Michaels and Marietta Cauchi contributed to this article.
Germany Canceling Eurofighter Jet Order Narrows Field of Buyers - WSJ.com
(Reuters) - Germany will not take delivery of the final shipment of 37 Eurofighter jets, a defense source told Reuters on Wednesday.
Deputy Defense Minister Stephane Beemelmans told the parliamentary defense committee that the last 37 jets had been cancelled, the source said.
The cancellation means Airbus Group (AIR.PA), which makes the Eurofighter, will miss out on business. In 2011 the cost of a single Eurofighter in the first shipment of jets was put at 57 million euros.
Originally, the German military wanted 180 Eurofighters but there has never been a decision or a contract for the final tranche.
Germany cancels delivery of last 37 Eurofighter jets: source| Reuters
Germany had initially pledged to buy up to 250 of the advanced fighters but, like others in the four-nation consortium that funded the jet, has opted to cut orders because of domestic budget pressures.
The makers of the Eurofighter, including BAE Systems BA.LN -0.18% PLC, Airbus Group EADSY -0.88% NV DICO.AE -0.42% and Finmeccanica FNC.MI -1.77% SpA, hope to win orders from countries including Saudi Arabia and Malaysia to keep their production lines going beyond 2018.
BAE said Wednesday that it had secured a long-awaited deal with Saudi Arabia on the final pricing of 72 Typhoons ordered in 2007, raising hopes for a follow-on deal for more aircraft.
The Eurofighter consortium is waging an intense battle for overseas orders with jets made by Lockheed Martin Corp. LMT -0.03% , Boeing Co. BA -1.71% and France's Dassault Aviation SA, AM.FR -1.39% alongside makers of cheaper fighters such as Sweden's Saab SAAB-B.SK +0.67% AB, which last year beat its larger rivals to win a $4.5 billion order from Brazil.
Germany and the U.K. originally planned to each buy 250 Eurofighters, but have steadily reduced their commitments and alongside partners Italy and Spain agreed in 2009 to split their final orders into two tranches.
Stéphane Beemelmans, Germany's deputy defense minister, told a parliamentary meeting on Wednesday that Germany has canceled the second tranche of 37 jets valued at €3.5 billion, according to a parliamentary official who attended the meeting and declined to be identified. A government official confirmed the decision. Germany flies 107 Eurofighters and has another 36 on order.
Eurofighter and Airbus Group, which handles the German Eurofighter contract, said they hadn't been told of a government decision, and other suppliers such as engine maker Rolls-Royce RR.LN +2.41% PLC declined to comment.
"I wouldn't hold my breath for more orders from the four [consortium] nations," said Douglas Barrie at the International Institute for Strategic Studies, a London-based think tank.
BAE announced the long-awaited deal with Saudi Arabia on the eve of its 2013 earnings report Thursday. Europe's largest defense contractor by revenue said the pact would keep its 2013 results broadly in line with previous guidance for double-digit growth in underlying earnings for the full year.
Analysts remain doubtful whether Saudi Arabia will buy more Typhoons after opting not to set up a domestic assembly line for the jets and signing a larger-than-expected deal to acquire Boeing F-15 fighters.
"When they decided not to build an in-country line, that probably capped the total at 72," said Richard Aboulafia, analyst at the Teal Group, a U.S. aerospace consultant.
—--Daniel Michaels and Marietta Cauchi contributed to this article.
Germany Canceling Eurofighter Jet Order Narrows Field of Buyers - WSJ.com
(Reuters) - Germany will not take delivery of the final shipment of 37 Eurofighter jets, a defense source told Reuters on Wednesday.
Deputy Defense Minister Stephane Beemelmans told the parliamentary defense committee that the last 37 jets had been cancelled, the source said.
The cancellation means Airbus Group (AIR.PA), which makes the Eurofighter, will miss out on business. In 2011 the cost of a single Eurofighter in the first shipment of jets was put at 57 million euros.
Originally, the German military wanted 180 Eurofighters but there has never been a decision or a contract for the final tranche.
Germany cancels delivery of last 37 Eurofighter jets: source| Reuters
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