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The UK and Saudi Arabian Governments have agreed on price escalation terms relating to the long-running Eurofighter Typhoon combat aircraft purchase under the Salam programme.

The terms of the pricing agreement are claimed to be broadly consistent with the BAE’s prior trading outlook for 2013, and are reflected in contractual arrangements between the UK and the company.

BAE Systems chief executive Ian King said, "This is an equitable outcome for all parties, I am pleased that we have been able to conclude this negotiation which builds on our long standing relationship with this much valued customer."

A cash settlement is expected to follow the agreement, beginning in the early part of 2014.

The two governments had signed an understanding document in 2005, which included provision for the Typhoon aircraft acquisition in accordance with the economic conditions at that time.

Saudi Arabia had agreed on a £4.4bn price-tag in 2007, but the deal ran into rough weather after BAE attempted to extract additional money following the country’s request for more advanced weaponry and equipment for the fighters, The Guardian reports.

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By GlobalData
"A cash settlement is expected to follow the agreement, beginning in the early part of 2014."

The deal covers a total of 72 multi-role fighter jets, 30 of which have already been handed over by BAE to the Royal Saudi Air Force (RSAF).

The aircraft are being manufactured at the company’s facility in Warton, Lancashire, UK, according to the news agency.

Typhoon is a twin-engine, canard-delta wing, multirole fighter manufactured by a consortium of EADS, Alenia Aeronautica and BAE for deployment during air operations, including air policing, peace support and high-intensity conflict missions across the globe.

Apart from Saudi, the swing role combat aircraft is in service with Austria, Italy, Germany, Spain and the UK, and also been ordered by the Royal Air Force of Oman.

Defence Technology