Reports that Germany could lift a veto on Britain’s proposal to sell Eurofighter Typhoon jets to Saudi Arabia could mark positive news for UK defence companies.
A deal for Saudi Arabia to buy 48 multi-million pound Typhoons from the UK had been made in 2019, but was paused over concerns around its air strikes.
However, local reports from Die Welt am Sonntag suggest the German government is close to lifting a ban on exports to the Gulf state, with Britain having resumed deliveries in 2020.
If allowed, the deal would see Saudi Arabia strengthen its Eurofighter Typhoon fleet from 72 to 120 of the British, German, Spanish and Italian-built jets.
This second order could indeed mark a boost for UK defence firm BAE Systems PLC (LSE:BA.), which produces fuselage, foreplane, windscreen and canopy parts, alongside assembling the aircraft, Citi Group analyst commented.
“We estimate batch two could be worth about 30p per share incremental upside to the BAE Systems shares,” the bank commented.
Rolls-Royce Holdings PLC (LSE:RR.) would likely benefit too, with the FTSE 100-listed firm among a consortium of companies which produce the jet’s EJ200 engine.