Aerospace giant BAE Systems has secured a multi-billion pound deal with the Sultanate of Oman to produce 20 military aircraft starting by 2017. The deal covers not only the production of the aircraft, but also in-service support for running them, and means that 6,000 jobs in hi-tech and engineering should be protected in the UK.
It’s good news for BAE, which earlier this week discovered that a contract to produce 72 fighter jets for Saudia Arabia has hit a stumbling block over the final price. The firm has already supplied 24 but the disagreements on cost have meant that the rest of the deal has been delayed.
The PM, eager to put his name to any UK business being done overseas, said: ‘It’s testament to Britain’s leading aerospace industry and the deal will safeguard thousands of jobs across the UK, not just at the BAE Systems factories in Lancashire and the East Riding of Yorkshire, but at many small businesses up and down the country that play a vital role in delivering these aircraft.'
It's a welcome bit of good news for BAE - in October, the much-mooted merger between BAE and EADS fell through because of disagreements between the UK, French and German governments over how it would be structured. The £28bn merger was always hugely political, given that BAE’s number-one customer the Pentagon made it a necessary condition that ‘the French and German governments should never own more than 9% each of the merged outfits, that they should not vote as a bloc and that they should not have representatives on the holding company board.’
No small wonder that the European partners weren’t so keen. Worse still, is that 40% of BAE’s revenues come from the US government, which is planning to cut its own military spend by almost $600bn over the next decade. Maybe selling to the Middle East is all that’s left at the moment…