Saab Beats Boeing in Brazil’s $4.5 Billion Fighter Jet Deal

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  • Posted on December 18, 2013


    Saab AB (SAABB) defeated Boeing Co. to develop 36 jet fighters for Brazil’s air force following allegations the U.S. government spied on President Dilma Rousseff.

     

    The deal is worth $4.5 billion through 2023, the Defense Ministry said in a statement today. Brazil picked Saab over the Chicago-based company because of the performance and cost of its aircraft as well as willingness to transfer technology, Defense Minister Celso Amorim told reporters in Brasilia. The other finalist was Paris-based Dassault Aviation SA. (AM)

     

    Rousseff in September called off her state visit to Washington following reports the U.S. National Security Agency intercepted her communications with staff. Today she said the armed forces had a key role in strengthening cybersecurity to protect privacy and Brazil’s sovereignty.

     

    “Boeing only didn’t win the deal because of the lack of trust created by the spying incident,” Welber Barral, who was Brazil’s trade secretary from 2007 to 2011, said by phone. “Had the decision been last year, Boeing would have won.”

     

    Boeing is disappointed and will work with Brazil’s air force to determine why it lost, according to an e-mail statement from the company.

     

    Brazil’s government will maintain close commercial ties with the U.S., Amorim said.

     

    Gripen NG

     

    Brazil expects to sign the aircraft contract within 12 months, Air Force Commander Juniti Saito told reporters. Saab’s Gripen NG fighter jet will replace the Mirage 2000 that Brazil’s air force is scheduled to retire Dec. 20. It will be based on a similar model already being used in other countries, Saito said.

     

    Saab has marketed its aircraft as a less costly and more reliable alternative than that of some of its competitors. Switzerland has committed to buying 22 of the jets, though the decision may face a national referendum next year. Current Gripen versions are in service with the Swedish air force as well as the South African, Thai, Hungarian and Czech Republic armed forces.

     

    Saab’s press office in Sao Paulo said it would publish a statement on the deal later today.

     

    Brazil’s decision is a setback for Dassault’s Rafale aircraft, which has struggled to build a presence outside France, with only India so far saying it wants to buy the fighter jet.

     

    Dassault’s press office didn’t immediately respond to an e-mail sent after business hours seeking comment on its loss.

     

    ‘Peaceful Country’

     

    Brazil needs to be prepared to protect newly discovered offshore oil reserves, Rousseff told military officers in Brasilia earlier today. The country’s push to renew its fleet of jets coincides with its ambition to gain a permanent seat on the United Nations Security Council.

     

    “We are indeed a peaceful country, but no way will we be a defenseless country,” she said.

     

    The Defense Ministry in a report last year estimated the armed forces would need annual investments of 20 billion reais ($8.6 billion) over the next two decades.

     

    European Aeronautic, Defence & Space Co. is carrying out a 1.9 billion-euro ($2.6 billion) order to supply Brazil with 50 helicopters. France’s DCNS SA and Brazil’s Construtora Norberto Odebrecht SA are building five submarines in Rio de Janeiro state, costing the government 9.6 billion reais through 2015, according to Defense Ministry data. One will be nuclear powered.

     

    Brazil in May 2008 started the bidding process to replace its aging fleet of jet fighters. The government had demanded technology transfer as a condition for bidding.

     

    Saab rose 1.84 percent today, Dassault dropped 0.4 percent and Boeing fell 0.3 percent.

     

    To contact the reporters on this story: Raymond Colitt in Brasilia Newsroom at rcolitt@bloomberg.net; Arnaldo Galvao in Brasilia Newsroom at agalvao1@bloomberg.net

     

    To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net

    Bloomberg/AC