Saudi Typhoon Deal Still Not Fully Done
Saudi Arabia and Great Britain have still not agreed to terms for a resumption of Eurofighter Typhoon deliveries. Twenty-four aircraft are operational in the Middle East kingdom, out of the total 72 agreed in the Al-Salam deal. Construction of numbers 25 upward began in 2009, but instead of proceeding to the final assembly line, the subassemblies were placed in storage at BAE’s Warton factory. When they were eventually moved into final assembly last year, it seemed that an agreement was close.
But when BAE Systems announced its 2012 financial results recently, the company was obliged to note, “Discussions to formalize Typhoon price escalation under the Salam program remain ongoing.” The failure to conclude the renegotiation is now affecting BAE’s overall financial strategy. In the wake of the aborted merger with EADS, BAE wants to reward shareholders with a further $1.5 billion buyback, but the full amount cannot be paid until the Saudi deal is done.
Meanwhile, numbers 25 through 28 of the Saudi order are now flying at Warton. They are all two-seaters. About a dozen more are in final assembly. BAE said, “Deliveries are scheduled to recommence in 2013 following a contract amendment to enable UK final assembly of the balance of 48 aircraft.” In the original Al-Salam deal, they would have been assembled in Saudi Arabia. Instead, a maintenance and upgrade facility will be built there. The contract for this has been agreed upon, but a follow-on support contract beyond the first three years of Saudi Typhoon operations is still being negotiated, BAE said. The last aircraft is scheduled for delivery in 2017.
However, the Saudis have already contracted for a multi-role upgrade to their Typhoons. Raytheon Enhanced Paveway II dual-mode guidance bombs are being added, together with the Thales Damocles targeting pod (the Typhoons of the four-nation Eurofighter consortium are being fitted with the Israeli Litening 3 targeting pod, which is politically unacceptable to the Saudis). Flight-tests of this combination were to have started in Saudi Arabia late last year. Moreover, AIN understands that the Saudis will be the first Typhoon operator to add the MBDA Storm Shadow cruise missile. The Saudis are also being tapped for AESA radar development and integration funding, since the four European nations have still not finally committed to this upgrade.