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U.K DENIES EUROFIGHTER CUT

10 Jul 02. The U.K. Treasury said it doesn’t plan to single
out the Eurofighter combat aircraft, one of Europe’s largest procurement programs, for cuts in its annual government-spending review next week.

“As far as I’m aware, there is no issue with the Eurofighter in the review,” a Treasury spokeswoman said.

The U.K. Defence Ministry said it doesn’t plan to rescind a commitment for ordering 232 Typhoon combat aircraft from the Eurofighter consortium led by BAE Systems PLC (U.BA) and European Aeronautic Defence & Space Co . NV (N.EAD).”Under a strategic review, we are committed to order 232 aircraft,” a spokesman at the British MoD said.

Comments by the Treasury and the MoD follow a U.K. media report saying the Treasury would like to allocate part of the budget earmarked for the acquisition of Eurofighter jets to other programs.

The report spread fears among investors that BAE Systems could lose part of the
planned workload stemming from the Eurofighter contract.

“The issue of Eurofighter numbers isn’t something that is part of the spending review negotiations,” the MoD spokesman said.

The Treasury Monday will release its annual Comprehensive Spending Review, a broad review of all government spending that sets guidelines for the budget. Under the review, the Treasury allocates budgets to each ministry over a three-year period.

Britain has signed up a firm order for 55 Typhoon aircraft and is committed to place two further orders in 2003 and 2007 that will bring the total order to 232.

Germany is committed to acquire 180 Typhoon aircraft, while Italy and Spain have ordered 121 and 87, respectively.

The Typhoon program suffered numerous delays because of budget constraints and teething troubles.

The Eurofighter consortium, however, has a chance to clinch its first export contract for the Typhoon, after the company was selected as the preferred bidder by Austria last week for the supply of new-generation fighter-jets.

Comment: For some time we have been pontificating on the possibility of a Eurofighter cut. These comments suggest that this is unlikely however with the ever increasing number of existing fleet refurbishments, the orders may be stretched over some time. Some sources suggest that tranche 3 which is in effect a part of FOAS may be the most vulnerable. However better news suggests that Singapore may lease some Eurofighters which may overcome any purchase cancellations by the U.K.

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