Saab has beaten Boeing and Dassault in a Brazilian tender to supply 36 new fighter jets to replace the country’s existing fleet, securing the biggest ever foreign order in the company’s history.
The victory has come as a surprise as Sweden’s Saab Gripen was considered an underdog in the competition for a $4.5bn (£2.75bn) contract. Insiders have hinted Saab has managed to beat its rivals in the negotiations, which have been going on for more than ten years, as it offered considerably better pricing plus favourable technology transfer conditions.
According to Brazil’s Defence Minister Celso Amorim, the decision "took into account performance, the effective transfer of technology and costs – not just of acquisition but of maintenance".
Apart from the acquisition costs, the contract is expected to bring further billions to Saab for future supplies and service contracts.
Until earlier this year, Boeing was considered the hot favourite with its F/A-18 Super Hornet aircraft. However, the scandalous revelations about the US National Security Agency’s (NSA) digital surveillance practices regarding Brazil and its representatives has undermined trust in the USA and subsequently in the American defence giant Boeing.
"The NSA problem ruined it for the Americans," a Brazilian government source said according to Reuters on condition of anonymity.
"Was that worth $4bn?" the source asked.
It hasn't been the first case anyone has hinted the NSA spying scandal affected American businesses. In November, Cisco Systems complained the backlash against US spying hurt demand for its products in China.
Also French manufacturer Dassault Aviation appeared to be disappointed about its defeat. Though the company markets its Rafale fighter jet as one of the most effective and sophisticated fighter jets in the world, it has so far failed to attract customers. The high price tag is seen by many to be the main culprit.
Saab says the next-generation Gripen NG has a lower operational and maintenance cost than all fighters currently in service. The company has one prototype of the Gripen NG flying and another in production. The Swedish and Swiss armed forces have ordered the updated model for delivery starting in 2018.
Under the terms of their agreement, Brazil and Saab will now finalise contract details within a year. The first jet is expected to be delivered two years later, with about 12 of the aircraft expected each year after that.
The Gripens will replace Brazil’s obsolete Mirage fighter jets that have been taken out of service earlier this year.
At the briefing in which they announced their decision, government officials said Brazilian aircraft maker Embraer SA would be Saab's main local partner. The transfer of technology is crucial to help Brazil develop future generations of fighter aircraft.
"There isn't necessarily a need to produce all the parts in Brazil," Amorim, the defence minister, said. "What's important is that specific aviation technology is transferred to Brazil so we can develop it."
The Gripen, which can fly up to twice the speed of sound, will be the first supersonic aircraft made in Brazil.
Still, Boeing's loss is a setback for Embraer's recent collaboration with the US company. Boeing has offered to help with development and sales of Embraer's upcoming military cargo jet, providing a key ally to crack the coveted US market.
Boeing said the decision would not affect the company's ongoing commitment to expand its presence in Brazil or its partnerships with Embraer and other Brazilian companies.
The delta-winged Gripen, which is Swedish for Griffin, first entered service in the late 1990s and is flown by the Swedish, Hungarian, South African, Thai and Czech air forces, according to Saab's website.