Air Tanker, the consortium selected for a £13bn deal to supply the RAF with new refuelling aircraft, does not expect to sign a contract with the Ministry of Defence before early next summer.
The delay has been caused by the MoD's tough demands over the terms of the 27-year programme which it is insisting must involve a large element of risk being transferred to the private sector, it emerged yesterday.
The defence and aerospace group Cobham, which has a 25 per cent stake in Air Tanker, said it did not expect to sign a deal with the MoD until the second quarter of 2005. However, Allan Cook, Cobham's chief executive, said he remained confident that it would eventually be awarded under the Government's private finance initiative.
When Air Tanker was named in January as the bidder offering the "best prospect of securing value for money" in preference to a consortium led by Boeing, the MoD left open the possibility that the deal might not be financed through the PFI.
Mr Cook was speaking as Cobham unveiled a 17 per cent increase in underlying profits to £135m last year, boosted by a string of acquisitions. The results were at the top end of forecasts.
Warren Tucker, the group's finance director, said Cobham could afford to spend about £500m over the next three years on further acquisitions.
The company, which makes part for the Paveway laser-guided bomb, said military sales accounted for half of its £832m turnover last year and were likely to continue growing as a proportion of revenues on the back of strong US defence spending and Gordon Brown's pledge of a real terms increase in the MoD's budget.Reuse content