Saab Closes in on Swiss Gripen Deal With Swedish Guarantees

Switzerland will press ahead with an order for 22 Saab AB (SAABB) Gripen E/F fighter jets, signing the firm contract as early as 2013 and making a first payment a year later, Defense Minister Ueli Maurer said.

Sweden’s government will guarantee Switzerland a 3.1 billion Swiss franc ($3.2 billion) fixed price, the delivery time frame and the technical performance of the aircraft as part of the deal, Maurer said at a presentation in Thun, Switzerland.

Sweden and Switzerland could sign a firm contract as early as 2013 if Switzerland has no referendum on the Gripen deal, or by mid-2014 if the country decides such a vote is necessary. The Swiss government is scheduled in October to submit details of the Gripen program for parliamentary debate.

Switzerland will make a first payment to Saab of 300 million francs in 2014. The remaining payment schedule will be decided when the final contract is signed, Maurer said.

The Gripen is the best fit for Switzerland because “it was designed as a defense aircraft for a neutral country,” Maurer said. The Gripen was “significantly cheaper” than competing offers and is the “sensible solution” rather than “the top of the top,” Maurer has said.

‘Full Agreement’

“We feel confident that this will lead to a full agreement,” Swedish Defence and Security Export Agency director general Ulf Hammarstroem said in a separate presentation in Stockholm.

Saab will lease Switzerland 11 Gripen C/D class fighter jets between 2016 and 2020 for 44 million francs per year as an interim solution to replace its fleet of Northrop Grumman Corp. (NOC) F-5E Tigers.

Switzerland will treat the leased fighter jets “like a deposit,” in state-to-state negotiations if Saab delays delivery of the new fighter jets, Swiss Air Force Commander Markus Gygax said in an interview.

“We could have the C/Ds a little longer without having to pay as much,” he said. “That would be a good solution.”

Alternative compensation could be Gripens delivered with more weapons and higher-tech electronics, he said.

Each new Gripen E/F class jet is worth less than $100 million dollars per basic unit, Gygax said. He could not comment on how much of the 3.1 billion franc project cost would go to Saab.

Switzerland will receive 11 new Gripens by the end of 2019 and all 22 aircraft by 2021, the Swiss defense ministry said in a presentation.

Switzerland said August 24 that it had entered a framework agreement with Sweden for the purchase of 22 Gripen jets, completing a memorandum of understanding signed by the two countries on June 29. The jets will begin delivering in 2018, later than 2016 time frame which Switzerland had first sought.

To contact the reporter on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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