August 18, 2010 / 10:40 AM / 7 years ago

Swiss may hike budget for jets to 5 bln Sfr

* Defence ministry paper proposes hiking aircraft budget

* Paper confirms plan is for 22 jets-TV report

By Andrew Thompson

ZURICH, Aug 18 (Reuters) - The Swiss defence ministry is proposing to spend as much as 5 billion Swiss francs ($4.80 billion) to finance an unpopular plan to buy 22 new fighter jets, Swiss television said citing an internal document.

According to a consultation document dated July 29, Defence Minister Ueli Maurer is planning to ask the Swiss cabinet to raise the procurement budget for the jets to 5 billion francs even though the plan could be shot down in a national referendum.

The Swiss jet deal is hotly contested within the international aerospace industry as it is seen as setting the stage for a number of upcoming projects in Europe.

Boeing (BA.N) pulled out of the bidding last year, leaving three other contenders: Anglo-German-Italian Eurofighter, built by EADS EAD.PA with BAE Systems (BAES.L) and Finmeccanica SIFI.MI; France’s Rafale, built by Dassault Aviation (AVMD.PA); and the JAS 39 Gripen, built by Sweden’s Saab (SAABb.ST).

    A Swiss defence ministry spokesman confirmed the document existed, but would not comment on the details.

    He added that the July 29 paper was still subject to revisions and that a final request would be presented to the cabinet in September.

    Switzerland has wanted to replace its ageing Northrop (NOC.N) F-5E/F Tiger fighters, purchased in 1976 and 1981, with up to 33 new aircraft.

    But the defence ministry has said it could not even afford 22, given its current budget. The programme, which had an initial price tag of 2.2 billion francs, has become increasingly unpopular given the economic crisis.

    To finance the deal, Maurer will ask for the overall defence budget, which covers both army and airforce, to be raised by 2 billion Swiss francs to 6.3 billion Swiss francs annually. Additionally, he will propose a reduction in the size of the Swiss Army to 96,000 staff from currently 135,000 staff, television reported on Tuesday. ($1=1.042 Swiss Franc) (Editing by Jon Loades-Carter)

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