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Time Running Out on Europe's Typhoon Orders

Feb. 23, 2014 - 07:15PM   |  
By ANDREW CHUTER   |   Comments
UAE-DUBAI-AVIATION-SHOW
Production of the twin-engine Eurofighter Typhoon combat jet — seen here at the Dubai Airshow in November — may conclude at the end of 2017 if there are no further orders from the program's four partner nations or export customers. (Getty Images)
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LONDON — Governments and industry are in discussions over the fate of the final order of Eurofighter Typhoon combat jets for the four partner nations involved in the program amid Germany’s plan to end its purchases early.

The British, German, Italian and Spanish governments are in negotiations with industry over whether to go ahead with part or all of what is known as the Typhoon Tranche 3B order, an executive familiar with the talks said.

An Italian source said the industry partners have given the governments a deadline to agree on the plan for Europe’s largest single defense program.

“The Eurofighter industrial partners have given nations until mid-2014 to decide whether they wish to order Tranche 3B aircraft or not,” the Italian source said.

Eurofighter — the Airbus Defence & Space, BAE Systems and Finmeccanica-owned consortium that runs the program — wouldn’t be drawn on the details of any discussions with the governments. But a spokesman did confirm they were “talking to the customer to find a solution acceptable to both sides.”

The four nations are on the hook for a total of 124 Tranche 3B aircraft for what is planned to be the last batch of the twin-engine planes to be delivered to the European partners.

With budget cuts across Europe biting into Air Force fighter jet numbers, most analysts have for some time written off the possibility of a Tranche 3B order, unless export orders are counted as part of the commitment.

The governments might have to pay compensation to industry if they do not turn their longstanding commitment to buy the remaining Tranche 3 aircraft into a firm order.

Tranche 3 was split into 3A and 3B portions as a compromise among the four nations and industry in 2009, after the governments balked at committing to the entire remaining order for the fighter jet amid the deepening economic crisis in Europe and beyond.

Britain has the largest 3B commitment at 48 aircraft, followed by Germany with 37, Italy with 25 and Spain with 14. All but the Germans have deep public finance problems, which have led to reductions in defense spending.

The first of 112 Tranche 3A aircraft ordered by the four nations was test flown by BAE for the first time late last year.

Assembly lines across the four nations will start going quiet at the end of 2017 if there are no further orders from the partner nations or export customers.

Executives, though, say they are confident production of the Typhoon will continue well beyond 2020 on the back of export orders.

An additional order for Saudi Arabia and a possible deal with Bahrain look like the best prospects in the export market.

The fighter also is competing in Qatar and Kuwait, and secondhand planes are being offered for lease by Malaysia.

India remains a potential customer if France’s Dassault Aviation fails to seal long-running negotiations to supply the Rafale, a rival twin-engine fighter.

The United Arab Emirates could also re-emerge as a customer, even though the gulf state and BAE broke off negotiations in December for a possible 72-jet order.

More than 400 Tranche 1 and Tranche 2 Typhoons have been delivered to the four partner nations, plus export customers Austria and Saudi Arabia. The aircraft has also been purchased by Oman.

German media last week reported that Stephane Beemelmans, a senior Defense Ministry official, told the parliamentary defense committee in Berlin Feb. 19 that Germany’s final tranche of 37 jets was to be axed.

Beemelmans was sacked the following day by new Defense Minister Ursula von der Leyen, who cited mismanagement of a number of procurement programs, including the Typhoon.

The news of the cut, however, was not a surprise. Local business daily Handelsblatt reported that former German Defense Minister Thomas de Maizière had decided in 2011 that the ordered amount was to be reduced.

Among Germany’s partners, Italy has been the most vocal about its Eurofighter intentions, although publicly, at least, its position has softened.

In 2010, Italy’s then-Defense Minister Ignazio La Russa said Italy would not order the 25 3B aircraft that it had planned to buy, reducing Italy’s total planned order from 121 to 96.

But his successor, Maurizio Mauro, said last year at the Paris Air Show he would not exclude buying 3B aircraft.

“Let’s see, we will understand as we go along,” he said, adding it could be linked to Italy’s ongoing F-35 joint strike fighter purchases from Lockheed Martin, the program’s prime contrator.

A spokesman for Alenia Aermacchi, the Finmeccanica company that leads Italy’s assembly effort, said the country’s air force would receive the first of its 21 Tranche 3A aircraft in the first half of this year.

He said no date had been fixed for the delivery of Italy’s final Tranche 3A aircraft, but said Europe-wide production of Tranche 3A aircraft would wind up at the start of 2018.

A spokeswoman for the British Defence Ministry said its “position was unchanged, with no contract decision made yet.”

The British and Italians are also buying F-35s, although no production contracts have been signed, and a debate is raging in Rome over just how many F-35s Italy can afford.

The Spanish MoD couldn’t be contacted for a comment on its Typhoon plans. ■

Tom Kington in Rome contributed to this report.

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