BAE in negotiations with Oman over £1.4bn Eurofighter deal
By Sylvia Pfeifer, FT-Defence Industries Correspondent
Published: November 13 2008 02:00 | Last updated: November 13 2008 02:00
BAE Systems is in talks to sell up to 24 Eurofighter Typhoon fighter aircraft to Oman in a deal worth at least £1.4bn, the Financial Times has learnt.
UK defence sources close to the negotiations said the Gulf state wanted to replace its 24 ageing Jaguar jets with Typhoons within the next four years.
Any agreement would be structured as a government-to-government contract, similar to last year’s ‘Al Salam’-deal to sell Typhoons to Saudi Arabia. The deal could also lead to similar ‘billions of pounds’ worth of maintenance and support work for BAE, Europe’s largest defence -contractor.
Another export deal in the Middle East would be a feather in the cap of Ian King, the new BAE chief executive. In a sign of the company’s commitment to the region, the BAE-board, led by chariman Dick Olver, has decided to hold its first ever meeting in the Middle East in the coming weeks.
The sources said that BAE had been talking directly to the Omani government about the sale without using external advisers. The group’s use of middlemen formed part of an investigation into allegations – always denied by BAE – that bribery was used to secure a deal to sell arms and aircraft to Saudi Arabia in the 1980s.
BAE Systems’ business in the Middle East has garnered much media attention in recent years, mainly on one of its most lucrative contracts, the al-Yamamah deal to sell Tornados and Hawks to Saudi Arabia. But, to the intense frustration of its management, the focus has been on long-running allegations of corruption and bribery related to the contract, always denied by the company.
Behind those headlines, the Middle East’s region’s contribution to BAE’s financial health and, arguably, Britain’s economy, should not be underestimated.
The export of some aircraft to Oman would also help avoid the severe financial penalties incurred if the UK cancels any part of its Eurofighter order and would help ease budget concerns at the Ministry of Defence, which is committed to buying 88 new Typhoons as part of its membership of the Eurofighter consortium.
The Omani contract would also help secure crucial manufacturing jobs in the UK at a time of falling employment. Oman has a close relationship with the UK, which has supplied the sultanate with defence equipment for decades. Its air force also operates American F-16 jets.
Last night, a source close to the MoD warned that the deal was not yet concluded. “The Omanis are looking at what capabilities are available in the market, but they may decide this is not the right time for them,” the source said.
BAE commented: “Oman is a customer with whom we have a long and valued relationship . . . we will continue to support their requirements as and when they arise.”
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