HELSINKI — Saab has a new elevated confidence that it can export the next-generation JAS 39 Gripen fighter jet to more countries. Group CEO Håkan Buskhe believes the trend toward higher spending on defense, both in Europe and globally, will help create demand and bolster the Swedish fighter's export potential.
The renewed confidence in the next-generation Gripen is based on Saab's belief that future government capital spending on military aircraft will emphasize shorter lead-in and delivery times. The added optimism is also based on wider global interest in the Gripen.
Saab has estimated prospective export sales for the Gripen of about 300 units over the next 15 years. Based on expanded interest in the aircraft, this number could potentially rise well above 300.
Higher spending by nations on military capability building is welcome relief for defense groups like Saab that had feared years of possible decline, Buskhe said.
"There are more reasons to be confident. Apart from the U.S. administration's desire that all NATO-member countries in Europe should spend 2 percent of GDP on defense, the trend where European countries could spend between 20 to 30 percent of their budgets on new materiel procurements can change the dynamic in the European market," Buskhe said.
Revenue generated from export orders directly relating to the Gripen, including income from sales to the Swedish Armed Forces, was a pivotal force in strengthening Saab's operational cash flow in the first quarter of 2017.
Saab's income was boosted by larger advances and milestone payments from customers linked to the Gripen program, including Brazil, Saab's first partner country in South America.
Saab recorded sales of $656 million during the January-March time frame. This was a 9 percent increase compared to the corresponding first quarter result in 2016.
A larger-than-anticipated demand for the Gripen is likely to emerge in Europe as some countries accelerate their fighter fleet replacement programs.
Bulgaria has given the Saab Gripen C/D lead-candidate status in its program to replace its ageing MiG-29 combat aircraft. Bulgaria plans to invest about $836 million to acquire eight new multi-role fighter aircraft. The Eastern European country, which has reached an advanced stage in its aircraft-type evaluation process, aims to achieve a delivery date of 2022 for the eight aircraft.
Saab has adopted a strategic regional approach to reinforce the export drive underpinning the development of the next-generation Gripen.
The company recently opened a new office in the Philippines to elevate its presence in Asian markets. Saab's reputation in the region gained important traction after it secured a deal in 2008 to deliver 12 Gripen C/D fighters to Thailand.
New export deals in Asia are likely to be modeled on the supply and offer terms that Saab connected to its aircraft sale agreement with Brazil. Similar terms, which include 100 percent technology transfer, industrial partnerships and commitments to undertake final assembly of the Gripen-NG locally, have also been offered to India as part of its fighter replacement program.