By Andrea Thomas and Doug Cameron
The decision by Germany to cancel a multibillion-euro order for
Eurofighter Typhoon jets on Wednesday leaves Europe's largest
defense program even more reliant on a shrinking band of potential
buyers in the Middle East and Asia.
Germany had initially pledged to buy up to 250 of the advanced
fighters but, like others in the four-nation consortium that funded
the jet, has opted to cut orders because of domestic budget
pressures.
The makers of the Eurofighter, including BAE Systems PLC, Airbus
Group NV and Finmeccanica SpA, hope to win orders from countries
including Saudi Arabia and Malaysia to keep their production lines
going beyond 2018.
BAE said Wednesday that it had secured a long-awaited deal with
Saudi Arabia on the final pricing of 72 Typhoons ordered in 2007,
raising hopes for a follow-on deal for more aircraft.
The Eurofighter consortium is waging an intense battle for
overseas orders with jets made by Lockheed Martin Corp., Boeing Co.
and France's Dassault Aviation SA, alongside makers of cheaper
fighters such as Sweden's Saab AB, which last year beat its larger
rivals to win a $4.5 billion order from Brazil.
Germany and the U.K. originally planned to each buy 250
Eurofighters, but have steadily reduced their commitments and
alongside partners Italy and Spain agreed in 2009 to split their
final orders into two tranches.
Stéphane Beemelmans, Germany's deputy defense minister, told a
parliamentary meeting on Wednesday that Germany has canceled the
second tranche of 37 jets valued at EUR3.5 billion, according to a
parliamentary official who attended the meeting and declined to be
identified. A government official confirmed the decision. Germany
flies 107 Eurofighters and has another 36 on order.
Eurofighter and Airbus Group, which handles the German
Eurofighter contract, said they hadn't been told of a government
decision, and other suppliers such as engine maker Rolls-Royce PLC
declined to comment.
"I wouldn't hold my breath for more orders from the four
[consortium] nations," said Douglas Barrie at the International
Institute for Strategic Studies, a London-based think tank.
BAE announced the long-awaited deal with Saudi Arabia on the eve
of its 2013 earnings report Thursday. Europe's largest defense
contractor by revenue said the pact would keep its 2013 results
broadly in line with previous guidance for double-digit growth in
underlying earnings for the full year.
Analysts remain doubtful whether Saudi Arabia will buy more
Typhoons after opting not to set up a domestic assembly line for
the jets and signing a larger-than-expected deal to acquire Boeing
F-15 fighters.
"When they decided not to build an in-country line, that
probably capped the total at 72," said Richard Aboulafia, analyst
at the Teal Group, a U.S. aerospace consultant.
--Daniel Michaels and Marietta Cauchi contributed to this
article.
Write to Andrea Thomas at andrea.thomas@wsj.com and Doug Cameron
at doug.cameron@wsj.com
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