Eurofighter woos buyers for 10 billion euro order

BERLIN (Reuters) - Defence firms have moved to kickstart negotiations over the Eurofighter Typhoon by asking Britain, Germany, Italy and Spain to invest an estimated 10 billion euros (8.3 billion pounds) in the next wave of jet fighter production.

A Belgian Air Force Eurofighter typhoon fighter jet performs during the AirPower 09 air show at the Hinterstoisser air base in Zeltweg June 27, 2009. REUTERS/Dominic Ebenbichler

A spokesman for a consortium of BAE Systems, EADS and Finmeccanica told Reuters it had submitted an offer at the end of May -- a move that analysts say could trigger a tug of war over dwindling defence budgets during a European sovereign debt crisis.

The spokesman declined to disclose the value of the offer, which covers 124 planes, but defence industry sources at the Berlin Air Show said it was around 10 billion euros.

Eurofighter says a decision on whether to build the planes would be needed within a year in order to avoid a production gap it believes would be damaging for exports and hit jobs.

The climate for talks is difficult, however, after Germany announced tough defence cuts and Britain promised to defer any major spending decisions until after a strategic defence review.

Britain, Germany, Italy and Spain have so far taken delivery of a combined 222 Eurofighter Typhoons out of the 620 they originally ordered.

The original order spanned three separate tranches. But the third and final production run of 236 planes had to be split up last year when buyers could only agree to purchase 112 aircraft.

Any decision to cancel the rest is likely to trigger calls for compensation as well as intensive lobbying over the fate of 100,000 jobs tied up directly or indirectly in the project.

Besides domestic contracts, Saudi Arabia has ordered 70 of the planes and 15 have been sold to Austria.

The Typhoon is competing in a number of contests against rival models such as the French Rafale, Swedish Gripen or Boeing’s F-18.

Switzerland has renewed interest in updating its fighter fleet after suspending a competition last year and could make a decision later in 2010, air show delegates said.

Other nearby countries showing interest in deals or evaluating their positions include Serbia, Romania and Turkey.

Middle East and Asian demand has been strong as countries face new threats or pressure to renew ageing fleets.

But Brazil, actively courted by France as the first foreign buyer for its Dassault-built Rafale, has so far delayed a decision and may have to postpone until after October 3 elections.

“We are worried; nothing is happening at the moment,” a French industrial source said of the competition, in which Eurofighter is not represented.

Additional reporting by Matthias Blamont in Paris; editing by Simon Jessop