BAE shrugs off concerns over £10bn deal to sell Saudi Arabia Typhoon fighter jets
BAE Systems’ boss brushed aside concerns about the future impact of a multi-billion-pound deal to sell fighter jets to Saudi Arabia.
An estimated £10billion agreement to sell 48 Typhoon jets to Riyadh has been hanging in the balance since October 2018, when Germany banned arms exports to the country following the killing of journalist Jamal Khashoggi in the Saudi consulate in Turkey.
This has affected the British defence group because it works with firms that have German links, such as Airbus and MTU Aero Engines, to build the Eurofighter Typhoon – meaning the bumper contract has been put on pause and has not yet been finalised.
An estimated £10bn agreement to sell 48 Typhoon jets to Riyadh has been hanging in the balance since October 2018, when Germany banned arms exports to the country
But BAE chief executive Charles Woodburn yesterday said an increase in defence spending from other countries would offset the potential impact that Germany’s export ban would have on the company’s books.
Woodburn said: ‘A number of European countries are looking to increase their defence spending and move closer to meeting their Nato commitments. The group is well-positioned to benefit.’
Woodburn added that BAE could also bag more orders from some of Saudi Arabia’s neighbours.
He said: ‘Within the Middle East region there are a number of customers in addition to Saudi Arabia looking for Typhoons.’
The FTSE 100-listed company, which is Britain’s biggest security manufacturer, is already aiming to become more reliant on the US defence market, where the Trump government has loosened the purse strings on defence spending.
It plans to spend £1.7billion buying two defence businesses that will expand its footprint in the US.
Woodburn’s comments came as the company reported a 9 per cent rise in sales to £20bn in 2019, with profits rising £2.1billion.
Shares in BAE yesterday rose 2.6 per cent, or 16.4p, to 656.4p.