BAE Systems: Progress made on Saudi jets deal

British defence contractor BAE Systems said it was making good progress on talks with Saudi Arabia over changes to its order for 72 Eurofighter Typhoon jets but that an agreement on price had yet to be reached. "Of the 72 aircraft contracted under the Salam programme the first squadron of 24 have now been delivered to the Royal Saudi Air Force (RSAF)," BAE said in an email sent to Reuters on Tuesday. "In terms of the location of the final assembly of the last 48 aircraft, conversion to Tranche 3 and formalisation of price escalation, good progress has been made with budgets approved in December 2011 through the royal decree. Negotiations on price escalation will continue into 2012." The Saudi royal decree, which was signed off at the end of 2011, releases some £1.5bn ($2.4bn) on top of the existing programme commitment for a series of enhancements to the programme, BAE said. The Salam deal, signed in 2007, is worth around £4.5bn. Saudi Arabia's Defence Minister Prince Salman bin Abdulaziz is due to meet British Prime Minister David Cameron and Defence Secretary Philip Hammond in London later on Tuesday. Saudi Arabia is a key Arab ally and a major buyer of British-made defence equipment. Abdulaziz is responsible for securing multi-billion dollar arms purchases, which have been used to cement Saudi Arabia's ties with the West. He is also seen as a possible candidate to one day rule the conservative Islamic kingdom. Earlier this year two Western defence sources said Saudi Arabia, which placed a $29.4bn order for new Boeing F-15 jets in late 2011, was in the early stage of talks to increase its Typhoon order by as many as 48 aircraft. Changes to the BAE-Saudi deal could see final assembly of Saudi's remaining Typhoon jets moved from BAE's facility at Warton, Lancashire, in north England. Conversion of the jets to a Tranche 3 variant will see new missile and radar technology added to the Typhoon. Earlier this year BAE said talks with Saudi over changes to its order for 72 Eurofighter Typhoon jets would continue into 2012. The delay hit its earnings last year, which fell 7 percent.