Saab's Gripen fighter aircraft faces crucial sales test in India

Published: May 19, 2006
Source: www.marketwatch.com



LINKOEPING, Sweden (MarketWatch) -- Swedish aerospace and defense company Saab AB (SAAB-B.SK), which has failed to sell its flagship JAS-39 Gripen fighter aircraft in the past five years, has a lot riding on an $8 billion decision from the Indian government.

Much of the world's arms trade is watching India, which is expected to choose a shortlist in May among five aerospace companies and a consortium competing for an order of as many as 190 fighter aircraft. The estimated $8 billion project would be a significant relief for Saab. The Gripen program, 20% held by U.K.-based BAE Systems PLC (BA.LN), is the centerpiece of Saab's aeronautics division, the company's largest unit, which makes 39% of total sales.

"If (Saab) doesn't get any (Gripen) orders in the next three years, production would be shut down, resulting in a significant reduction of employment and capacity in Linkoeping," a London-based analyst says.

Gripen's marketers have sought to find new markets after years of defense cuts in Sweden, compelling Saab to lay off a total 2,000 workers in the past three years, including 350 from the Gripen program in 2005.

The company has some prospects in its own backyard, where Denmark and Norway have issued tenders for about 96 new fighters, though a final decision isn't expected until 2008.continue..