BAE working to secure new Eurofighter Typhoon orders

With Dassault thriving from a spate of Rafale orders from Egypt, Qatar, and India, the British defence giant BAE is pursuing potential sales opportunities for the Eurofighter Typhoon (jointly developed and produced with Italy’s Leonardo-Finmeccanica and Airbus Defence and Space) in Saudi Arabia, Bahrain, and Belgium.

The platform did secure a $9 billion U.S. deal from Kuwait for 28 Eurofighter Typhoon Tranche 3, but the principal vendor on that front is Italy’s Leonardo-Finmeccanica.

For BAE, the strongest and most accessible prospect would be a follow-on order from Saudi Arabia, which currently operates 64 Tranche 2 (40) and Tranche 3 (24) fighters, with another 8 due to be delivered. BAE is hoping to secure an additional order of 48 aircraft for £4bn ($4.91 billion U.S.).

In the midst of political and economic uncertainty in the U.K., a Typhoon sale to Saudi Arabia may be viewed by London as a major short-term policy goal (so as to maintain and generate employment).

It is worth noting that under its “Vision 2030” goal, Riyadh is aiming to domestically source 50% of its defence procurements. One can expect commercial offsets to play a key role in this regard, Riyadh needs to charter a capacity building strategy (to produce the requisite skilled labour and industry foundation) to engage in high-tech defence industry work. BAE could potentially offer support on this front (whilst also committing to domestic employment expectations).

Although Bahrain is slotted to procure 19 Lockheed Martin F-16V from the U.S. under a multi-billion-dollar contract (also comprising of upgrade kits for its existing F-16C/Ds), BAE reported that it has been in talks with Manama over the Typhoon. Specific insights (e.g. how many aircraft Bahrain intends to procure) have yet to be released.

In Western Europe, BAE is also setting its sights on Belgium’s looming fighter program, which is aimed at replacing the country’s legacy Lockheed Martin F-16A/B Mid-Life Update (MLU) fleet. In December 2015, Brussels committed to procuring 34 next-generation fighter aircraft (IHS Jane’s).

Notes & Comments:

In contrast to its competitors, the Eurofighter Typhoon is a multilateral venture between three principal vendors in four different countries. The leading vendors – i.e. BAE, Leonardo-Finmeccanica, and Airbus Group – hail from the U.K., Italy, and Germany as well as Spain, respectively.

Each partner has a share in the cumulative manufacturing process, though each vendor could pursue and finalize export contracts independently. Moreover, the Typhoon benefits from a higher level of scale, which it has accrued thanks to the fact that it was developed by a multi-national consortium, with each member committing to procure a relatively sizable number at launch.