British defence company BAE Systems announced Friday that it was close to tying up a multi-billion deal to sell 48 Eurofighter Typhoon jets to Saudi Arabia.
News of the potential deal came as Saudi Crown Prince Mohammed bin Salman focused on military and security issues with a meeting with defence secretary Gavin Williamson on the last day of a three-day visit to the United Kingdom.
“The UK Government has signed a Memorandum of Intent with the Kingdom of Saudi Arabia to aim to finalise discussions for the purchase of 48 Typhoon Aircraft,” said the company in a regulatory filing.
“This is a positive step towards agreeing a contract for our valued partner. We are committed to supporting the Kingdom as it modernises the Saudi Armed Forces and develops key industrial capabilities critical to the delivery of Vision 2030.”
News of the long-delayed deal came after both countries had set a £65 billion trade and investment target for the coming years, broadening a trading relationship built on defence and security.
BAE Systems agreed a £5 billion deal to sell 24 of the same aircraft to Qatar last year plus other services. Because of those extra support services, the latest Saudi deal is expected to be worth less than £10 billion.
Such deals are concluded between governments before contracts are inked. The Qatar contract was signed three months after the countries agreed a memorandum of intent.
BAE in 2017 delivered the last of 72 planes ordered by Saudi Arabia in an earlier deal but the long-anticipated follow-up agreement had proved elusive.
Difficulties in concluding the deal contributed to the planned loss of nearly 2,000 jobs at BAE Systems last year. More than 500 Eurofighters have been delivered to five European countries and Saudi Arabia but the company in 2017 won fewer orders than France’s Dassault Aviation for its Rafale jet.
The Typhoon programme is a joint project between BAE, France’s Airbus and Italy’s Finmeccanica but has been dogged by cost and technical problems.
The Typhoon aircraft have been used by the Saudi-led coalition fighting rebels in Yemen. The UK government has faced criticism from opposition leaders and campaigners about selling military hardware during the ongoing humanitarian crisis in Yemen. Prime Minister Theresa May said this week that anti-terrorism cooperation between the two countries have saved lives.
The company’s share price increased by more than two per cent on the news.
Charles Woodburn, BAE Systems chief executive, said: “Today’s news is a positive step towards agreeing a contract for our valued partner, the Kingdom of Saudi Arabia. We are committed to supporting the Kingdom as it modernises the Saudi Armed Forces and develops key industrial capabilities.”
