India to buy the Rafale?
Jan. 31 (Bloomberg) -- Dassault Aviation SA rose the most
in more than 22 years, after a person familiar with the matter
said the company emerged as the lowest bidder to supply 126
fighter jets to the Indian Air Force.
Dassault shares rose more than 22 percent in Paris and
traded 20 percent higher at 735 euros as of 3 p.m. A majority of
the stock is held by the Dassault family, while European
Aerospace, Defense & Space Co., the co-producer of the
competing Typhoon, owns 46 percent.
“The announcement comes after a very high-level, equitable
and transparent competition,” French President Nicolas Sarkozy
said in an e-mailed statement. “The Rafale was selected thanks
to its cost effectiveness over the lifetime of the plane.”
For Dassault Aviation, the sale to India of its Rafale
combat jet, which hasn’t won a single export order after 11
years of flying for the French military, would be mark a major
victory. Over the last decade, Dassault has consistently lost
out in competitions in countries including Singapore, South
Korea, Morocco and Switzerland.
India’s Defense Ministry will begin exclusive negotiations
with Dassault within 10 to 15 days, the person told reporters in
New Delhi today, speaking on condition of anonymity because the
proceedings aren’t public. Talks will likely last for weeks,
pushing the signing of a contract beyond the March 31 end of
India’s fiscal year, he said.
Indian law requires the government to negotiate a contract
with the lowest-bidding vendor. Dassault is competing in the $11
billion contest against the Typhoon, the Eurofighter plane built
by BAE Systems Plc, European Aeronautic, Defence & Space Co. and
Italy’s Finmeccanica Spa.
Indian Decision
Dassault is still in the running to win a contest in the
United Arab Emirates, and remains in talks with Brazil about a
contract.
Although it has been producing a plane a month for the
French military, without export orders to help pay the cost of
production, its funding burden falls entirely on France.
India shortlisted the Rafale and Eurofighter in April, when
it rejected bids from U.S. manufacturers Lockheed Martin Corp.
and Boeing Co., as well as Saab AB and OAO United Aircraft Corp.
The country is buying the fighters to replace an aging fleet of
Russian MiG-21s and Dassault Mirage 2000s.
Dassault had no immediate comment. The company recently
lost a contest to Saab’s Gripen in Switzerland, and Dassault has
since sought to get back into the contest by offering a new
commercial offer that includes fewer and modified Rafale jets.