Saudi Arabia to double its Typhoon order

[Arabian Legend]

Already posted, check out the Arab section.

Thank you anyway.

 

[Yzd Khalifa]

BAE Systems Agrees Pricing On Saudi Eurofighter Deal
The original contract had to be renegotiated after Saudi requested more advanced weaponry and equipment for the Typhoon fleet.
By
Reuters
18 hours ago

British defence contractor BAE Systems has finally agreed pricing with Saudi Arabia on its long-delayed Eurofighter Typhoon jet deal with the Gulf state, potentially leading to more contracts across the region.

Sales to countries such as Saudi Arabia have become increasingly important to BAE as it contends with shrinking defence budgets in the United States and Europe, but the company’s profits have been held back by years of talks over the 2007 deal to supply Saudi with 72 Eurofighters for 4.43 billion pounds ($7.4 billion).

The original contract, known as the Salam deal, had to be renegotiated after Saudi requested more advanced weaponry and equipment for the Typhoon fleet.

The saga has been watched closely by countries such as Bahrain, Qatar and Malaysia as they weigh up the Typhoon against competitors including Lockheed Martin’s F-35, Dassault Aviation’s Rafale fighter and the Gripen made by Sweden’s Saab.

“There is considerable relief that this long-running problem has been resolved,” independent defence analyst Howard Wheeldon said. “It does open up some very interesting doors, not only in Saudi Arabia, but across the Arabian Peninsula.”

BAE, which reports 2013 results on Thursday, said that a price has now been agreed between the British and Saudi governments. Though it did not disclose full details, BAE said the terms were broadly consistent with guidance the company gave in October for 2013 earnings, when it warned that failure to complete the deal could hit full-year profit by 6-7 pence per share.

“This is an equitable outcome for all parties,” chief executive Ian King said, adding that the agreement builds on the company’s relationship with a “much-valued customer”.

CASH CONCERNS

Shares in BAE, which builds the Eurofighter alongside European aerospace group Airbus and Italian defence contractor Finmeccanica, were up 0.3 per cent at 1036 GMT, having jumped by 4 per cent in early trade to a two-month-high of 455 pence.

BAE had continued Eurofighter deliveries to Saudi during the negotiations, prompting investor concern over rising amounts of cash being committed to the programme without being able to book profits. It also suffered a blow in December, when United Arab Emirates withdrew from talks over a potential $9.8 billion deal to buy 60 jets.

Wednesday’s announcement, however, removes much of the uncertainty for BAE, which said it will start receiving cash from the Salam deal in the first-half of this year.

“With Salam cash coming in, this should give BAE more flexibility for cash deployment moving forward,” RBC Capital Markets analyst Robert Stallard said. “It also allows the (Kingdom of Saudi Arabia) to move on to other potential agreements.”

With the Salam price finalised, BAE and Saudi Arabia are now likely to begin talks on a second batch of Eurofighters, which could bring an order for up to 72 more aircrafts.

The announcement also bodes well for the 1 billion pound share repurchase programme BAE launched in February, the full implementation of which was contingent on finalisation of the Salam deal.

BAE Systems Agrees Pricing On Saudi Eurofighter Deal » Gulf Business

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[SpArK]

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[Yzd Khalifa]

So let me get this straight. With the conclusion of this latest deal with BAE, the RSAF's fleet/order of Typhoons will essentially double from 72 to 144?

Together with the rest of its inventory of F-15SA, F-15S and F-15C fleets, it'd have one of the finest air forces on the planet. Is there anything else on the horizon? Perhaps a modernisation of its ground attack fleet (Tornado) and replacing the F-5s?

And since it's been mentioned above, is Saudi Arabia interested in participating in the development of the JF-17 or any other manufacturing initiative with Pakistan or otherwise? Or is this just conjecture?

We did upgrade the Tornados in 2008. As for the F-5s, we only use them for training role. I hardly think we will be placing another 72-Typhoon order, but maybe 33 or 40.

 

[The SC]

its more like when you are in position of buying & maintaing a merc or a BMW why will you buy a Kia

One like SA can by a Mercedes for himself, a BMW for his wife, and a Kia for his son /daughter going to school.

I believe the modest performance of the JF-17s is good enough to expand our fleet, enhance our capabilities, and maintain our self-defensive cutting-edge.

Modest performance for now (block1), wait till it gets an AESA radar and much more.

 

[Yzd Khalifa]

One like SA can by a Mercedes for himself, a BMW for his wife, and a Kia for his son /daughter going to school.


Modest performance for now (block1), wait till it gets an AESA radar and much more.

If the SANG gets the JF-17s, it will be heavily modified in order to match our demands and needs.

But I agree the AESA radar will dramatically transform the JF-17 into something to the next level.

 

[greatone]

$ 4.43 billion for 72 Typhoons works to around $61 million per plane.

On the other hand, India is expected to cough up around $120-150 million per plane for Rafale with the corollary that half of that i.e $ 60-75 million will be spent in India as offset and the rest is premium for ToT.


Even including offset and ToT Rafale deal seems steep to me.
How much ToT and offset did Saudis get ?

 

[The SC]

If the SANG gets the JF-17s, it will be heavily modified in order to match our demands and needs.

But I agree the AESA radar will dramatically transform the JF-17 into something to the next level.

I am pretty sure that the first things to be changed in the JF-17SA is the engine, maybe for an F-100-PW-220 series. Carbon fibre for the frame, European AESA, the best avionics available on the market, weapon integration, the best EW/ECM and more.
It will be a 30 million $ plane for the producer as a max price, and still will -with numbers- constitute a very potent deterrent.
The ToT on its own is priceless.

Can KSA buy a licence to produce a reliable and powerful engine from the west?