BAE to profit from Middle East missile sales

BAE Systems, the United Kingdom’s biggest defence group, expects to secure €1.2 billion (Dh4.84bn) from its share of a major missile order to Egypt and Qatar.

The European defence group MBDA, which includes Italy’s Finmeccanica, Airbus and BAE, won missile systems orders as part of an €11bn sale of French Rafale aircraft to Egypt and Qatar this year. BAE has a 37.5 per cent stake in MBDA.

“A significant number of ground-based air defence export campaigns continue to be pursued in central Europe and the Arabian Gulf region,” BAE said.

BAE, which reported almost flat earnings, is angling for other defence deals with Gulf states, which continue to spend on defence despite lower earnings from oil exports.

Saudi Arabia is forecast to boost its defence spending to $60bn by 2020 from the current $49bn, making it the world’s fifth-largest defence equipment buyer by then, according to data from IHS.

By the end of June, BAE had delivered 49 aircraft as part of a Typhoon jet deal with Saudi Arabia that was finalised last year after the UK and the kingdom agreed on pricing.

The deal, which was originally set at £4.4bn (Dh25.4bn) in 2007, had been delayed because of a disagreement over pricing. The Salam deal for 72 fighter jets could open the doors for more sales to Saudi Arabia.

BAE also expects to start delivery in 2017 of Typhoon and Hawk aircraft to Oman. BAE won a £2.5bn deal in 2012 from Oman for 20 aircraft. The deal was the last order for the Typhoon jet, which needs more sales in to stay in production.

BAE also has various other defence contracts with Oman and Saudi Arabia, including armoured vehicles.

“The business is pursing other armoured vehicle prospects elsewhere in the Middle East region,” BAE said. “Three competitive proposals have been submitted for combat vehicle programmes in Turkey and the Middle East. Award decisions are expected in late 2015 and 2016.”

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