By Rhys Jones
LONDON, April 3 British defence contractor BAE
Systems said a contract to build 48 Typhoon aircraft in
Britain for the Saudi Arabian air force had been signed but
changes to the price of the deal had yet to be agreed.
BAE had expected changes to the terms of the deal to be
signed off in 2011, but it warned in January this year that
talks over proposed adjustments to the final assembly of the
last 48 of the 72 Typhoon aircraft would continue into 2012 and
could hit 2011 profit.
The proposed changes -- such as the creation of a
maintenance facility in Saudi Arabia, the addition of new
capability to some aircraft and the formalisation of price
changes -- could affect the price of the deal.
The Salam deal to build a total of 72 aircraft was signed in
2007 and is worth around 4.5 billion pounds ($7.21 billion),
with the first squadron of 24 already delivered to the Royal
Saudi Air Force (RSAF).
"The contract for the final assembly of 48 Typhoon aircraft
in the UK has now been signed and final assembly has commenced
at our Warton facility, discussions are ongoing with regard to
the creation of a maintenance facility in Saudi Arabia and the
formalisation of price variations," BAE said in an email sent to
Reuters on Tuesday.
"In terms of ... conversion to Tranche 3 and formalisation
of price escalation, good progress has been made with budgets
approved in December 2011 through the royal decree. Negotiations
on price escalation will continue into 2012."
Conversion of the jets to a Tranche 3 variant will see new
missile and radar technology added to the Typhoon.
The Saudi royal decree, which was signed off at the end of
2011, releases some 1.5 billion pounds ($2.40 billion) on top of
the existing Salam programme commitment for a series of
enhancements, BAE said.
Saudi Arabia's Defence Minister Prince Salman bin Abdulaziz
is due to meet British Prime Minister David Cameron and Defence
Secretary Philip Hammond in London later on Tuesday. Saudi
Arabia is a key Arab ally and a major buyer of British-made
Prince Salman is responsible for securing multi-billion
dollar arms purchases, which have been used to cement Saudi
Arabia's ties with the West. He is also seen as a possible
candidate to one day rule the conservative Islamic kingdom.
Earlier this year two Western defence sources said Saudi
Arabia, which placed a $29.4 billion order for new Boeing
F-15 jets in late 2011, was in the early stage of talks to
increase its Typhoon order by as many as 48 aircraft.
Earlier this year BAE said talks with Saudi over changes to
its order for 72 Eurofighter Typhoon jets would continue into
2012. The delay hit its earnings last year, which fell 7