ORAC
9th Mar 2003, 00:16
Sundat Times - March 09 - MoD looks to US in $2bn defence deal.
Dominic O’Connell
BOEING, the American aerospace contractor, is poised to win a landmark $2 billion (£1.2 billion) deal to sell up to six giant C-17 transport aircraft to Britain.
The contract will spark a fierce debate over Britain’s commitment to closer European defence integration and rekindle speculation over a merger between Boeing and BAE Systems, Britain’s largest defence contractor.
Three years ago Britain leased four of the high-tech C-17s from the US Air Force. The lease contract runs for seven years, and then the Royal Air Force (RAF) has an option to extend the leases or buy the aircraft, which are worth about $250m (£156m) each.
Defence-industry sources say the Ministry of Defence is set to exercise its purchase option early and is in negotiations to buy between four and six more aircraft outright. If Britain decides to take six new C-17 aircraft, the total value of the deal could exceed $2 billion.
The decision to buy American will be a snub to Europe’s defence industry, which has long-standing plans to build its own transport aircraft, the A400M. Although the A400M is not a direct rival to the C-17, defence experts say the Ministry of Defence’s decision has been influenced by continuing delays to the European project.
The C-17 purchase will fuel speculation that the ever-stronger defence ties between the US and UK will precipitate a Boeing-BAE Systems mer-ger. The Sunday Times re-vealed earlier this year that the two companies had held preliminary talks last year.
Last week Phil Condit, Boeing’s chairman and chief executive, admitted that BAE Systems was a potential merger target but said there were no immediate plans to bring the companies together. His comments sparked a flurry of speculation that a deal was imminent. Defence industry experts believe that while the British government would probably not oppose a deal, Boeing might run into opposition from American politicians.
Boeing last night declined to comment on the deal. The Ministry of Defence said no decision had been reached on whether to extend the current C-17 leases and that the UK remained committed to the A400M programme.
Dominic O’Connell
BOEING, the American aerospace contractor, is poised to win a landmark $2 billion (£1.2 billion) deal to sell up to six giant C-17 transport aircraft to Britain.
The contract will spark a fierce debate over Britain’s commitment to closer European defence integration and rekindle speculation over a merger between Boeing and BAE Systems, Britain’s largest defence contractor.
Three years ago Britain leased four of the high-tech C-17s from the US Air Force. The lease contract runs for seven years, and then the Royal Air Force (RAF) has an option to extend the leases or buy the aircraft, which are worth about $250m (£156m) each.
Defence-industry sources say the Ministry of Defence is set to exercise its purchase option early and is in negotiations to buy between four and six more aircraft outright. If Britain decides to take six new C-17 aircraft, the total value of the deal could exceed $2 billion.
The decision to buy American will be a snub to Europe’s defence industry, which has long-standing plans to build its own transport aircraft, the A400M. Although the A400M is not a direct rival to the C-17, defence experts say the Ministry of Defence’s decision has been influenced by continuing delays to the European project.
The C-17 purchase will fuel speculation that the ever-stronger defence ties between the US and UK will precipitate a Boeing-BAE Systems mer-ger. The Sunday Times re-vealed earlier this year that the two companies had held preliminary talks last year.
Last week Phil Condit, Boeing’s chairman and chief executive, admitted that BAE Systems was a potential merger target but said there were no immediate plans to bring the companies together. His comments sparked a flurry of speculation that a deal was imminent. Defence industry experts believe that while the British government would probably not oppose a deal, Boeing might run into opposition from American politicians.
Boeing last night declined to comment on the deal. The Ministry of Defence said no decision had been reached on whether to extend the current C-17 leases and that the UK remained committed to the A400M programme.