BEIJING, Dec. 14 -- Germany, Italy, Spain and the UK will go ahead with a 13 billion-euro (US$17 billion) order for Eurofighter military aircraft with the ground-attack capability demanded by Britain.

    "London-based BAE Systems Plc, European Aeronautic, Defence & Space Co and Italy's Finmeccanica SpA will receive the 236-plane order as early as this week," said a source close to the deal.

    The order has been delayed for two years because of UK concerns that the plane was too expensive and lacked the capability to attack ground targets with precision weapons.

    "This will give Eurofighter the credible air-to-ground role," said Paul Beaver, a defence analyst at Ashbourne Beaver Associates in London. "It should restore confidence in the export market, which has been damaged because of the procrastinations."

    Eurofighter, conceived 20 years ago for air defence against Soviet MiGs, is at least six years late and the cost has tripled to more than US$100 billion. Europe's biggest defence programme includes 400 suppliers and employs about 10,000 people working on the airframe and 10,000 working on the engine and other equipment.

    The four countries plan to buy as many as 620 planes in three installments, and 34 out of 148 first planes with air-to-air capability have been delivered. Britain asked for ground-attack weapons for the second tranche a year ago. There was little need for air-defense aircraft in the Iraq and Afghanistan wars.

    The order is "great news for the contractors," said Alan Beaney, who helps manage US$1.2 billion in assets including BAE stock at Principal Investment Management in Sevenoaks, England. "You have got a lot of fighter jets, where the big development costs have been spent, and now generating a lot of cash."

    The 13 billion-euro (US$16.9 billion) contract covers production of the aircraft and some development costs, while excluding weaponry, support and maintenance costs, said people familiar with the situation. The weapons are purchased under separate contracts.

    Munich-based Eurofighter GmbH, a venture including BAE, EADS, and Finmeccanica, is overseeing the manufacturing. It will sign a contract for the second-batch of planes with the Nato Eurofighter and Tornado Management Agency, which represents the four purchasing countries.

    "We cannot speculate on the precise date for the contract signature at this moment," said Theodor Benien, a spokesman for EADS's military-aircraft unit. BAE and the UK Ministry of Defence declined to comment as did Finmeccanica Germany's defence ministry and Italian and Spanish ministries.

    Britain will deploy Brimstone anti-tank missiles, Storm Shadow stand-off ordnance and Paveway II laser-guided bombs on its second-batch of planes, according to Eurofighter. Germany and Spain are planning Taurus ground-attack missiles and GBU guided bombs.

    "Britain has got the air-to-ground capability they wanted," said Beaver. "It's about making sure that the plane is wired to drop precision weapons guided by lasers or satellites, carry missiles that can be launched at range, and perform battle-damage assessment through cameras."

    The manufacturing of the first batch of Eurofighters was slowed to prevent a production gap with the second tranche. The contract for the second group of planes will include new prices for first-batch planes because of the programme slowdown, BAE Chief Executive Mike Turner said in November.

    The suppliers include a venture making the plane's engines of Rolls-Royce Group Plc, Kohlberg Kravis Roberts & Co's MTU unit, Fiat SpA's FiatAvio and Spain's Industria de Turbo Propulsores.

    Eurofighter Chief Executive Aloysius Rauen said in July that production would have to wind down, threatening thousands of jobs and costing as much as 2 billion euros (US$2.6 billion), if the four nations didn't commit to funding for the second batch of planes.

    Original plans for 765 Eurofighters were cut to 620 after Germany put the programme on hold in 1991 because of the cost of reunification and then reduced its requirement to 180 from 250 planes. The four partners were supposed to sign an order for the second tranche of planes at the end of 2002. That signing was postponed as the countries debated what capabilities should be in the planes.

    "The governments have conspired to raise programme costs significantly, and that's not being captured in any new order," said Richard Aboulafia, vice-president at the Teal Group, a consultancy in Virginia. "At the end of the day, it's the European taxpayer who picks up the bill. It's not going to be shareholders."

    Eurofighter's sole export customer is Austria, with an order for 18 planes. Greece in August said it will reconsider buying 60 jet fighters after the Athens Olympic Games as the country tries to reduce military spending. The combat-plane venture is also vying to supply as many as 20 jets to Singapore.

    (Source:China Daily by Matthew Fletcher)