Westland to join forces with Boeing for £10bn deal

Boeing is in talks with the British-based helicopter maker AugustaWestland about forming a joint bid for what could be one of the UK's largest- ever arms contracts - worth up to £10bn.

Boeing is in talks with the British-based helicopter maker AugustaWestland about forming a joint bid for what could be one of the UK's largest- ever arms contracts - worth up to £10bn.

Negotiations are at an early stage, but the two companies are particularly interested in collaborating on a project called Sabr, to provide the armed forces with new helicopters.

If the two do manage to strike a deal then it will generate thousands of jobs at AugustaWestland's manufacturing base in Yeovil, Somerset.

News of the negotiations is a blow to rival European aviation company Eads, and US helicopter maker Sikorsky. Both companies are also circling Sabr. However, the Ministry of Defence will give priority to bidders that are able to guarantee jobs in the UK - putting AugustaWestland in a prime position on the project.

Finmeccanica, Italy's largest defence company, is in the process of buying the half of AugustaWestland that it does not already own from British engineering company GKN.

AugustaWestland's potential position on Sabr is understood to have been factored into the £1.06bn price tag.

Britain's armed forces already use Boeing's Chinook and AugustaWestland's Merlin helicopters. The two companies believe that by joining forces they would be able to offer the MoD a newer version of the models, which could be cheaper than buying a new type of helicopter.

However, the MoD has yet to fire the starting gun on the Sabr project. Officials are still assessing the merits of the project and an announcement isn't expected until the end of the year. Critically, the MoD would require Treasury approval for such a large-scale project.

If it gets the go-ahead then the MoD hopes that the new helicopters will begin service early in the next decade.