Mideast Jet Demand To Offset Western Cuts – BAE

Sales of combat aircraft in the Middle East and Asia will more than compensate for cutbacks in U.S. and European spending, Britain’s BAE Systems forecast on Tuesday.

Europe’s largest defence contractor said international markets outside its U.S. and European heartlands would grow to account for around half of turnover at its military air and information unit by 2016, up from around a quarter now.

“This is a prudent view,” Peter Anstiss, the division’s business development director, said at a briefing on Tuesday in Warton, northwest England.

“Very clearly, the international market could more than compensate for the reductions in the U.S. and UK market,” Anstiss said.

The overseas market was worth about 90 billion pounds ($140 billion), with potential sales of 900 combat jets, through to 2020, he added.

BAE’s aircraft include the four nation-backed Eurofighter Typhoon, which it is developing in a consortium with European aerospace group EADS and Italy’s Finmeccanica .

The military air and information unit falls under BAE’s Platforms & Services (UK) arm, which contributed the most to its revenue in 2012. Overseas sales are one of BAE’s top priorities to boost growth after its attempt to merge with Airbus-owner EADS failed last year and as Washington and European governments rein in defence spending.

Saudi Arabia and Oman have so far signed up to buy Typhoon jets and the plane is also vying for deals in countries such as Malaysia, South Korea and the United Arab Emirates.

South Korea is likely to decide in the next two months which aircraft it will choose when it places an order for 36 jets, Anstiss said. The Typhoon is competing against Boeing’s F-15 and Lockheed Martin’s F-35 fighter jet.

Countries in the Gulf region have the potential to purchase 150 more Typhoon jets, Anstiss said, adding that this figure excluded Saudi Arabia’s order for 72 Typhoons and Oman’s 12 Typhoon aircraft.

In India, where the company lost a competition to supply the country with 126 fighters to Dassault Aviation’s Rafale aircraft, BAE is waiting on the sidelines to jump back in should the talks fall through, he said.

A decision from the Indian government with regards to a signed deal with Dassault could come before the second quarter of next year when the country holds elections, he said.

Countries that want to buy combat jets are also looking to invest in training aircraft, said Steve Timms, BAE’s head of defence information, training and services. Saudi Arabia and Oman have ordered the company’s Hawk trainer.

India, for instance, which operates one of the world’s largest Hawk fleets, could place two more orders, he said. The country has so far ordered 123 jets and is in talks to buy 20 more.

BAE is also bidding jointly with American firms Northrop Grumman and L-3 for a key deal to provide the United States with 350 Hawks. The U.S. government is expected to make a budget decision over the so-called T-X programme in 2015, Timms said.