German Government Approves Battle-Tank Export Deal to Indonesia

The German government has approved the export of 104 battle tanks to Indonesia, in the second major defense deal in three weeks involving German equipment.

The government approved the export of the tanks, 50 infantry fighting vehicles, 4 armored recovery vehicles, 3 armored vehicle-launched bridges and 3 pioneer tanks for export to the country, according to a document obtained by Bloomberg news. The government said it can’t disclose if the equipment was new or handed down from the German army.

German military-vehicle maker Krauss-Maffei Wegmann GmbH & Co. KG, on April 18 said it won a $2.5 billion contract to supply 62 Leopard 2 tanks, considered among the world’s most advanced battle vehicles, and 24 PzH 2000 Howitzers to Qatar. That transaction may mean more than 200 million euros for revenue for Rheinmetall AG (RHM), which partners with closely-held Krauss-Maffei on both systems, according to analyst estimates.

Weapons exports have become increasingly important to sustaining sales for U.S. and European arms makers as home markets contract. Saudi Arabia is also exploring the purchase of Leopard 2 tanks, considered among the world’s most advanced battle vehicles.

Rheinmetall today said first-quarter sales and order intake in its defense operations declined, and the unit swung to a loss as it sold fewer tracked vehicles and less ammunition. Dusseldorf-based Rheinmetall is cutting at least 500 jobs at its defense units in an efficiency push lasting through 2015.

Spokespeople for Rheinmetall and Krauss-Maffei weren’t immediately available for comment. Der Spiegel earlier reported the export of tanks to Indonesia, citing the government document.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net

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

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