The UK government has agreed a deal to replace Saudi Arabia's fleet of Tornado jets with the new Eurofighter, it was confirmed today.
The deal, reportedly worth £10 billion, will be a major boost for Britain's biggest defence manufacturer BAE Systems, which is part of the European consortium which makes the Eurofighter, also known as the Typhoon.
The Ministry of Defence released a statement today confirming that the "commercial principles" of the deal have been agreed.
The statement said: "The Governments of the Kingdom of Saudi Arabia and United Kingdom of Great Britain and Northern Ireland signed an Understanding Document, intended to establish a greater partnership in modernising the Saudi Arabian Armed Forces.
"The required commercial principles have now been agreed which has initiated the purchase of Typhoon aircraft and the associated commitment to the industrial plan to be launched."
It is thought that the deal will see Saudi Arabia take on 72 Eurofighter jets, with BAE possibly in line for a further windfall through maintenance contracts.
The Eurofighter's UK base is at Warton, Lancashire, where BAE employs 9,000 people in its aircraft division.
BAE shares lifted 3% today as investors welcomed the news, while shares in Rolls-Royce, which is part of a consortium which builds engines for the Eurofighter, were up 1%.
The initial understanding document between the UK and Saudi Arabia was signed in December and was seen as a key moment for Eurofighter as it was the first contract for the jets outside Europe.
The jet was developed by a consortium of companies in the UK, Germany, Spain and Italy and is competing against two rival projects, the US-made Joint Strike Fighter and the French Rafael.
In a statement to the stock market today, BAE said: "BAE Systems welcomes today's announcement that the Governments of the Kingdom of Saudi Arabia and the United Kingdom of Great Britain and Northern Ireland have agreed the required commercial principles which will effectively initiate the purchase of Typhoon aircraft and the associated commitment to the industrial plan to be launched."Reuse content