BAE Systems can´t get a lock on Saudi Typhoon contract

FTSE 100-listed aerospace and defence giant BAE Systems has published an update about its contract negotiations with the Saudi Arabian government regarding the supply of Typhoon aircraft.

In 2007, BAE Systems was contracted to supply the Royal Saudi Air Force with 72 Typhoon aircraft under the government-to-government Salam programme.

BAE System's company update stated: "Whilst progress has been made through the course of these negotiations, issues remain to be resolved before contract pricing, acceptable to all parties, can be agreed. Discussions continue towards a Salam agreement."

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"Acceptable pricing terms remain the group's driver to such an agreement, not the timing of the settlement."

Potential impact on underlying earnings per share

Should an acceptable agreement not be reached before the group's full year results announcement, the impact on 2012 trading guidance would be to reduce the group's underlying earnings per share by approximately 3 pence per share.

BAE Systems, as the prime contractor to the UK Government, has delivered 24 Typhoon aircraft to date.

The company reported that "all parties remain committed to the programme and further aircraft are in-build for deliveries to recommence in 2013."

Omani contract on radarOn a more positive note, reports surfaced in afternoon trading that BAE Systems could announce a contract win with Oman, for Eurofighter Typhoons, on the next 21st of December.

BAE Systems' share price was down 0.95% to 342.70p at 15:42 on Wednesday afternoon.

RF