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GERMAN APPROVAL FOR EUROFIGHTER

03 Dec 04. The FT reported that Germany became the first of the four Eurofighter partner nations to approve the purchase of its portion of the second batch of 236 Eurofighter Typhoon combat jets on Friday, clearing the way to the signing of a production contract later this month.

The approval by a parliamentary budget committee to buy a further 68 jets for €4.6bn ($6.1bn) is the last hurdle in Germany’s defence procurement process, which is more complicated than those of the other three partner governments – Italy, Spain and the UK.The other three nations are also finalising their funding processes, with the UK, the biggest buyer, close to securing the finance.

All four partners must have secured funding before the production contract can be placed with the Munich-based Eurofighter consortium. The signing of the contract is expected in the second half of December. The order for the second batch of aircraft, worth €13bn in total, has been delayed for more than a year as the UK insisted Eurofighter cut the costs of the programme and demanded the accelerated introduction of the air-craft’s ground attack capabilities. This resulted in protracted negotiations with the three other governments and the industrial partners. The consortium is made up of the UK’s BAE Systems, the Franco-German EADS and Italy’s Finmeccanica.

The German vote will come as a relief to Eurofighter after the Greek government signalled last week it was set to scrap its planned €10bn commitment to buy as many as 90 Typhoons, and reopen the tender. Confirmation by the four nations that they are buying the second batch of aircraft will lift the total firm orders for the aircraft to 402, including 18 from Austria, the only export order so far. The total programme envisages Germany, Italy, Spain and the UK buying a total of 620 aircraft. But a decision on whether to buy the third and final tranche of 236 jets is not required until 2007 or 2008 and it is widely believed that none of the four partners will take up their full commitment.

The UK Treasury is expected to sign off on the British portion of the contract for the second batch of 236 combat jets in due course. Treasury approval will effectively clear away the last hurdle preventing the Royal Air Force from placing an order for a further 89 aircraft.

The UK is currently taking delivery of its first tranche of 55 jet fighters – largely training aircraft as the RAF prepares to deploy the first operational squadron in 2006 or 2007. Once the contract has been approved by the Treasury, it will return to the Ministry of Defence for final signature.

The Typhoon is on a short-list of three aircraft in Singapore, along with Dassault’s Rafale and Boeing’s F-15. The government is looking for an initial batch of eight new jets to replace its ageing fleet of A-4 ground attack aircraft. A further 12 to 16 orders would follow, with the potential for a total order in excess of 50 aircraft. Other potential future buyers include Turkey and Saudi Arabia, though the competition in the combat jet market is stiff.

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