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Saab Wins Brazil Jet Deal After NSA Spying Sours Boeing Bid

posted 19 Dec 2013, 06:31 by Mpelembe   [ updated 19 Dec 2013, 06:32 ]

Brazil awards a 4.5 billion U.S. dollar contract to Saab AB to replace its ageing fleet of fighter jets, a surprise coup for the Swedish company after news of U.S. spying on Brazilians helped derail Boeing's chances for the deal.

LINKOPINGSWEDEN (TV4) - Swedish plane maker Saab AB won the bidding to sell 36 fighter jets to Brazil's armed forces on Wednesday (December 18), clinching one of the most valuable defence contracts up for grabs in an emerging market.

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The contract will supply Brazil's air force with 36 new Gripen NG fighters by 2020. Aside from the cost of the jets themselves, the agreement is expected to generate billions of additional dollars in future supply and service contracts.

Brazilian officials said the deal went to Saab because it provided the most affordable option, as well as the best conditions for technology transfer to local partners.

"We've offered these planes together with a comprehensive industrial package, so we're offeringBrazil to participate in the development and also production of these planes. So were starting a long term co-operation with Brazilian industry which will probably span several decades around this," Saab senior executive Lennart Sindahl said.

Chicago-based Boeing Co and France's Dassault Aviation SA were also contenders for the contract.

Until earlier this year, Boeing's F/A-18 Super Hornet had been considered the front runner. But revelations of spying by the U.S. National Security Agency in Brazil, including personal communication by Rousseff, led Brazil to believe it could not trust the United States (U.S.) company.

A U.S. source close to the negotiations said that whatever intelligence the spying turned up for theAmerican government was unlikely to offset the commercial cost of the revelations.

The delta-winged Gripen, which can fly up to twice the speed of sound, first entered service in the late 1990s and is flown by the Swedish, Hungarian, South African, Thai and Czech air forces, according to Saab's website.

Saab says the next-generation Gripen NG has a lower operational and maintenance cost than all fighters currently in service. The company has one prototype of the Gripen NG flying and another in production.

Sindahl said the Brazilian order, as well as an order by the Swedish Defence Materiel Administration, meant jobs at the Linkoping plant would be secured for a long time ahead.

"It means additional jobs and jobs for a long time ahead. Yesterday we agreed with the Swedish Defence Materiel Administration on sixty planes for Sweden and this means that we will have production in Linkoping going into 2020," he said.

Under the terms of their agreement, Brazil and Saab will now finalise contract details within a year. The first jet is expected to be delivered two years later, with about 12 aircraft expected each year after that.