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Last updated: August 19, 2008 11:40 pm
Talks have been held with countries including Japan about offloading large numbers of Eurofighter Typhoons that the British Ministry of Defence has ordered but can no longer afford.
The talks, which officials say are at an early stage, underline the scale of the cash crisis facing the MoD as it grapples with an estimated budget deficit of £2bn.
The Royal Air Force, which had ordered 144 Eurofighters in two earlier contracts, is committed to buying another 88 as part of its membership of the Eurofighter consortium with Germany, Italy and Spain.
Severe financial penalties would be incurred for cancelling or cutting this number and the UK is sounding out potential buyers for all or part of its order.
Defence officials have confirmed that Japan, Saudi Arabia and India are among countries that have expressed interest.
Japan’s interest will surprise many in the industry as it has tended in the past to buy more aircraft from US manufacturers.
India, which has in the past bought Russian fighters, has made no secret of its ambition to expand its indigenous defence capabilities and is evaluating bids from five groups, including Eurofighter, for a new multi-role combat aircraft.
India’s tender could be a lucrative order for the consortium. In order to divert aircraft intended for the RAF to India, the UK would need approval from its consortium partners. The transfer of sensitive military technology is likely to be another potential hurdle.
The Saudi Royal Air Force has 72 Typhoons on order from the UK under an agreement signed last September, to be built by BAE Systems, the arms contractor. Separately, Riyadh has begun talks with London to buy between 48 and 72 additional Typhoons, a source close to the Saudi government confirmed.
The initial BAE order, known as Project Salam, was worth £4.3bn for the aircraft, with the contract value likely to rise to £20bn once support and maintenance are included.
Any agreement on offloading the RAF Eurofighters is unlikely to be reached until next year.
The MoD said: “We would not comment on government-to-government discussions, even to confirm that such discussions are taking place.”
The sounding of potential buyers comes as the four partner nations in the consortium remain locked in difficult negotiations over whether each must buy the same number of aircraft from the group as agreed originally.
Both the UK and Italy asked late last year what it would cost to buy fewer aircraft than agreed initially or none at all, but both options were regarded as unworkable because they would incur such a high financial penalty.
The Eurofighter contract, designed to discourage countries such as Germany from cutting back orders, is written so tightly that it would be almost as cheap to take delivery of the aircraft as to incur the penalties.
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