BAE loses out as Lockheed wins £2bn Polish jet contract
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Your support makes all the difference.BAE Systems, the beleaguered defence contractor formerly known as British Aerospace, has lost out in the battle for the largest military order from a former Eastern bloc country.
The Polish government is to buy 48 F-16 fighter jets from Lockheed Martin of the US for $3.5bn (£2.2bn), it was announced yesterday.
In return, Lockheed has guaranteed to give more than $6bn of work to Polish contractors – a concession which helped it beat off rival bids from Dassault of France, which makes the Mirage 2000, and BAE, which was bidding in a joint venture with Sweden's Saab. Poland has been keen to upgrade its Soviet-era military now that it has joined Nato, and the deal will be a substantial boost to the country's economy.
Keith Goddard, an analyst at Capital Advisors, said Lockheed would be able to justify the concessions it has made to the Polish government because the deal represents a significant foothold in the former Eastern Europe and could lead to new deals with other countries.
He said: "The damage they can inflict on competitors by bringing that volume to themselves as opposed to letting their competitors' factories hum, and the strategic benefit of winning an Eastern bloc contract, will justify what they gave up to get the contract."
The blow to BAE comes at the end of a turbulent year in which its shares have tumbled almost 60 per cent after two profit warnings and the unexpected departure of its chief executive, John Weston, in April. Earlier this month BAE shocked the market by warning of substantial cost overruns on two huge Ministry of Defence equipment programmes with a combined value of £5bn. It has since been embroiled in a row with the MoD over who will pick up the bill.
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