Jackonicko

UK tries to offload Typhoon fighters
By Stephen Fidler, Sylvia Pfeifer and Alex Barker

Published: August 19 2008 23:31 | Last updated: August 19 2008 23:40

Talks have been held with countries including Japan about offloading large numbers of Eurofighter Typhoons that the British Ministry of Defence has ordered but can no longer afford.
The talks, which officials say are at an early stage, underline the scale of the cash crisis facing the MoD as it grapples with an estimated budget deficit of £2bn.
The Royal Air Force, which had ordered 144 Eurofighters in two earlier contracts, is committed to buying another 88 as part of its membership of the Eurofighter consortium with Germany, Italy and Spain.
Severe financial penalties would be incurred for cancelling or cutting this number and the UK is sounding out potential buyers for all or part of its order.
Defence officials have confirmed that Japan, Saudi Arabia and India are among countries that have expressed interest.
Japan’s interest will surprise many in the industry as it has tended in the past to buy more aircraft from US manufacturers.
India, which has in the past bought Russian fighters, has made no secret of its ambition to expand its indigenous defence capabilities and is evaluating bids from five groups, including Eurofighter, for a new multi-role combat aircraft.
India’s tender could be a lucrative order for the consortium. In order to divert aircraft intended for the RAF to India, the UK would need approval from its consortium partners. The transfer of sensitive military technology is likely to be another potential hurdle.
The Saudi Royal Air Force has 72 Typhoons on order from the UK under an agreement signed last September, to be built by BAE Systems, the arms contractor. Separately, Riyadh has begun talks with London to buy between 48 and 72 additional Typhoons, a source close to the Saudi government confirmed.
The initial BAE order, known as Project Salam, was worth £4.3bn for the aircraft, with the contract value likely to rise to £20bn once support and maintenance are included.


More blinding reporting from the FT, who think that Typhoon has a unit production price of £68 m, roughly 50% more than Eurofighter GmbH, the IPT, and more in pounds than the first export customer paid in Euros.

To say that the FT is aviation and defence illiterate would be FAR too kind.

And here we have an article, bylined to a trio of unknown journos, not one of whom has any track record or credibility when it comes to aerospace or defence. Read their article, and it becomes clear that they have no grasp of the Typhoon programme, either, and have muddled together elements from a number of old stories, quite possibly with MoD connivance. (Whenever it’s time to sign a production contract, the UK has raised the spectre of cutting back numbers in an effort to screw the best possible deal out of industry and its NETMA partners).

It’s not that hard to learn about the Typhoon programme. Eurofighter regularly sit down with the press at major shows, arranging breakfasts at which all the major EF GmbH people (CEO, COO, CFO, production, exports, etc. are available for briefings and in depth conversations).

As a result, we know that while Germany and Spain are negotiating for their full committed totals for Tranche 3, Britain and Italy requested information on the cost and industrial implications of taking smaller numbers of aircraft in Tranche 3 – Britain requesting information on a zero option, a 50% option and the full total. NB that the umbrella contract (for 620 aircraft across three tranches) is a contract, and any reductions will entail penalties, requiring compensation to the other partners to make up for (say) wings that won’t be required, as well as some very complex financial and industrial restructuring.

In an effort to get the Brits and Italians on board quickly, the German Defence Ministry has suggested splitting Tranche 3 into two phases. Ruediger Wolf outlined the plan in a letter to his British, Italian and Spanish counterparts, and to NETMA, on 7 July.

In this letter, Wolf confirmed that Germany would sign for its whole third tranche commitment of 68 aircraft, but “could accept a two-step approach," with a first batch being ordered when the contract is signed, but with the second batch being contracted at a yet-to-be-defined later date.

Wolf suggested that the contract would have to indemnify the other nations if one country failed to complete the second step at the agreed date, and that the first phase should include more than 50 percent of the originally agreed Tranche 3 total.

Wolf stressed that the first phase of the Tranche 3 contract still needs to be signed within six months, and confirmed that all partners have a contractual obligation to approve the full third tranche of 236 aircraft – for which Eurofighter GmbH already have an umbrella contract.

Opinions differ as to whether a partner can sell its aircraft for export (this could be interpreted as taking work away from the other partners, who would otherwise expect exports to result in the production of new aircraft, providing work for all four nations).

It may be that this could be circumvented in Government-to-Government deals with countries that lie outside the agreed export campaigns, such as Saudi Arabia – or possibly Oman – and there have been whispers that such Government-to-Government campaigns are underway. At Farnborough, I got the strong impression that Omani interest was real and quite immediate, but that any Saudi repeat order was still much further away.

India and Japan are certainly Typhoon prospects, but Germany (EADS) leads a normal campaign in India, while the Japan campaign is jointly run by Italy and the UK (Finmeccanica and BAE). If the UK was separately negotiating to flog off its own second hand Typhoons, this would not go down well with our partners – and some of the journos here on PPRuNe, some of whom keep their fingers on the Typhoon pulse, one of whom has flown in the aircraft, would have heard about it.