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Saab Eyes Other Markets After Dropping Denmark Bid

Jul. 28, 2014 - 09:02AM   |  
By GERARD O’DWYER   |   Comments
Gripen NG Test aircraft
Saab officials said the company chose to not bid on a Denmark fighter program and concentrate on other markets. Above is a Gripen E/F Test aircraft. (Stefan Kalm/ / Saab)
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HELSINKI — Sweden’s decision not to submit a formal bid for Denmark’s $5.5 billion to $6 billion Fighter Replacement Program (FRP) was a “strategic choice” supported by state partners and Saab, said Ulf Hammarström, the CEO of Sweden’s Defense Export Agency (DEA).

That “strategic choice” followed a comprehensive assessment by a working group composed of officials from Saab, the Ministry of Defense and the DEA. The state-industry partnership, said the DEA, would now focus on finding buyers in other markets in Europe, Asia and South America, where the potential to win long-term sale agreements is higher.

Fundamentally, the state-industry group concluded that the Swedish Gripen-E candidate aircraft was unlikely to defeat its main rivals, Lockheed Martin’s F-35 and Boeing’s F/A-18F Super Hornet. The clear inference is that the Danish fighter replacement project favors a US rather than a European outcome.

Denmark is due to decide on the type of aircraft it will purchase to replace its fleet of F-16s by July 2015.

The deadline for delivery of formal bids to the FRP expired on July 21. The absence of Gripen-E leaves Cassidian’s Eurofighter Typhoon as the sole European bidder in the Danish competition.

“We decided not to respond to the invitation [Danish] after a careful analysis together with industry partners. The conclusion not to submit a tender is the result of a thorough assessment that the state and industry have carried out together,” said Hammarström.

The DEA serves as the agreement management agency for the Gripen, and is responsible for Gripen contracts with Thailand, the Czech Republic and Hungary. In May, the DEA signed a new 12-year lease contract for 12 Gripen C/D aircraft with the Czech Republic worth $790 million. The agency is also involved in negotiations to sell an initial 36 Gripen-E fighters to Brazil.

Sweden had been expected to submit a tender to the FRP for the next generation Gripen-E, the same version that Sweden is selling to Brazil.

Saab CEO Håkan Buskhe used the company’s second quarter results meeting with analysts, held in Stockholm on July 18, to talk-up the company’s prospects of selling a minimum of 400 Gripen-E aircraft by 2034.

“Buskhe didn’t mention Denmark once as a prospective market for Gripen when he met analysts or presented the group’s interim results. The writing has obviously been on the wall for some time. The decision not to bid wasn’t a sudden one by Saab or the Swedish state,” said Luc Van Miert, an industry analyst based in The Hague.

Buyer interest in the Gripen remains strong internationally, said Buskhe.

“The development of Gripen-E is going according to our time plan and budget, and will be delivered to Sweden commencing in 2018,” Buskhe said. Regarding Brazil, the group’s ambition is to secure a final sales agreement by the end of 2014, the CEO said.

“The onus on Saab and the Swedish government is not to allow a deal with Brazil to slip through their hands. Brazil’s economy sits on such a precarious edge that anything or nothing is possible. Brazil is also crucial for Sweden’s Gripen project because it is seen as a gateway sale to other major markets in South America,” said Van Miert.

Buskhe conceded that the May referendum result in Switzerland, which ended Saab’s hopes of selling 22 Gripen-E aircraft to the Swiss Air Force, did come as a setback. However, Saab remains confident that new markets can open up for the Gripen in India, Malaysia and Slovakia, said Buskhe.

“We have not lowered our expectations for sales of 400 aircraft over the next 20 years, despite the fact that Switzerland, at least this time around, chose not to proceed with the Gripen E purchase,” Buskhe said. ■


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