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BAE Sees South Korea Typhoon Choice Leading Other Bids

BAE Systems Plc (BA/), Europe’s largest defense company, said South Korea is poised to decide whether to buy Eurofighter Typhoon combat planes, in one of the biggest decisions since the jet lost tenders in India and Japan.

South Korea may buy as many as 36 Typhoons in the next two months, Peter Anstiss, BAE’s business development director for military aircraft, told reporters today. Rivals include Lockheed Martin Corp. (LMT)’s F-35 Joint Strike Fighter, in which London-based BAE is a major partner, and Boeing Co. (BA)’s F-15.

The Eurofighter Typhoon, built in a consortium with European Aeronautic, Defence & Space Co. (EAD) and Finmeccanica Spa (FNC), had lost competitions in India to the Dassault Aviation SA (AM) Rafale, the F-35 in Japan, and the Saab AB (SAABB) Gripen in Switzerland before getting a lift on Dec. 21, when Oman agreed to buy 12 Typhoon jets and eight Hawk 128 trainers. Other countries are also looking at ordering new combat planes.

“The international marketplace is where we have to put a lot of effort,” Anstiss said. “There are a number of activities around the Gulf states with a potential for combat aircraft purchases of 150 aircraft in the Typhoon class.”

BAE, which has been looking to export markets to offset low U.K. defense spending, has identified potential for sales of 900 combat aircraft, worth 90 billion pounds ($140 billion), through the end of the decade, Anstiss said.

Gulf Opportunities

Discussions also are under way over the potential sale of Typhoons to the United Arab Emirates, Anstiss said. Kuwait and Qatar are other potential buyers, and further orders may come from Saudi Arabia, he said. Malaysia also has begun an evaluation for as many as 24 jets. Anstiss said the list of bidders could be narrowed to two this year.

The Eurofighter partners also remain hopeful India may emerge as a buyer if contract talks with Dassault Aviation falter. Anstiss said the company may find out more before Indian elections due next year. The Typhoon offer has been improved since the losing bid was submitted, he said.

Combat-plane sales also could spur orders for training aircraft, said Steve Timms, BAE’s managing director for defense information training and services. Oman and Saudi Arabia are among recent fighter buyers also opting for the company’s Hawk trainer plane, he said.

India, which builds the Hawk under license, may buy more, Timms said, while Germany and France have an aging trainer aircraft fleet that may need modernization. Poland is actively seeking a new plane, he added.

A major focus for BAE’s training-plane business is a future U.S. competition to replace T-38 jets under the T-X program. The effort could lead to sales of more than 300 planes to the U.S. with another 500 or more export orders possible, Timms said. BAE has teamed with Northrop Grumman Corp. (NOC) and L-3 Communications Holdings Inc. (LLL) for the U.S. bid.

To contact the reporter on this story: Robert Wall in London at rwall6@bloomberg.net

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

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