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France slims jets price in Brazil bid
by Staff Writers
Brasilia, Brazil (UPI) Feb 5, 2009

Aerospace chief calls for clarity on new transport plane
Munich, Germany (AFP) Feb 6, 2010 - The head of EADS on Saturday called for seven countries that have ordered the Airbus A400M military plane to provide "a clear idea" on the future of the troubled project "by the end of next week." "We need to have a clear idea, not detailed but clear, on what is happening on the A400M by the end of next week," Louis Gallois, of the European Aeronautic Defence and Space Company, told reporters on the sidelines of the Munich Security Conference in Germany. European countries badly need the new transport aircraft, under development at EADS unit Airbus, but the project is three years behind schedule and a reported 11 billion euros (15 billion dollars) over budget. EADS has threatened to pull the plug unless the seven NATO countries that have ordered 180 of the aircraft for 20 billion euros stump up more cash, saying that the European aerospace sector is at stake. With the seven countries -- Germany, France, Spain, Britain, Belgium, Luxembourg and Turkey -- holding a series of crisis meetings, French Defence Minister Herve Morin set Thursday a deadline of February 28 to strike a deal. He also said that he hoped an agreement could be found at the next meeting of European Union defence ministers at the end of February in Palma de Mallorca, Spain. Morin said in Turkey that France has urged its partners to stump up an extra 1.5 billion euros on top of two billion euros already envisaged by the seven countries, still short of the 6.4 billion euros that EADS is seeking.

Brazil looks set to purchase 36 Rafale fighter jets from France after its maker, Dassault, moved to skim $2 billion off the price.

The newspaper Folha de S. Paolo reported that the deal was now down to $10.2 billion -- including $6.2 billion for the jets themselves and $4 billion for maintenance and repairs provided for the next decade.

News of the price cut surfaced following a brief stop-over that Defense Minister Nelson Jobim paid to Paris while en route to Israel. There was no immediate confirmation of the Folha de S. Paolo report and a Dassault spokesman in Paris said the company was still waiting for the Brazilian government to make its choice.

Since the tender was called, Rafale -- competing against Boeing's F-28 and Saab's Gripen NG -- has been seen as the most likely choice of Brazilian President Luiz Inacio Lula da Silva.

The process has since them been held up pending delivery of the Brazilian government of an air force technical assessment of the three contenders.

Despite the purported price cut, the Rafale remains the most expensive bid among the competing aerospace companies. The Boeing package is valued at $7.6 billion and the Saab offer at $6 billion, Folha da S. Paolo reported.

On Thursday, however, Brazil's government denied the newspaper report, saying that the country's president "still has not decided on the selection process."

Jobim also billed the report "unfounded," adding that the purchase had not been concluded.

France has pledged to transfer all technology related to the supersonic Rafale so that Brazil, bent on becoming the lead military power in South America, could assemble most of the jets itself and sell them regionally.

By some accounts, the contract for the initial 36 planes could rise to more than 120.

Brazil has already signed a deal with the French for the construction of five submarines in Brazil. The deal also includes building a nuclear-powered vessel.

What's more, the multibillion-dollar deal would help offset the downturn at Dassault's jet division.

French President Nicolas Sarkozy, also, has a lot of personal prestige knotted into the deal.

In September 2009, Sarkozy and his Brazilian counterpart looked locked in a deal, issuing a joint statement that negotiations for the purchase had begun when the tender process had not been concluded.

Lula's preference for the Rafale has been evident from the start but under pressure from the military establishment the government kept the competition open.

The final decision though, rests with Lula, who has said that the pick will be determined by "political and strategic" considerations, not just the price tag.


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