A Hawk aircraft assembly line established by British defense giant BAE Systems could be used to bring more aircraft manufacturing to Saudi Arabia.
It comes as defense contractors seeking orders in the Kingdom come under increased pressure to contribute to Vision 2030, the economic diversification strategy being driven by Crown Prince Mohammed bin Salman, deputy premier and interior minister.
The world’s third-largest defense company is supplying its latest batch of 22 Hawk training jets to the Kingdom, under a deal agreed two years ago following an earlier order for 18 of the aircraft.
The final assembly of the planes, which are used to train fighter pilots, will be done in Saudi Arabia, with the first deliveries expected in the third quarter of the year.
“As part of the Hawk batch-two contract, we agreed to establish a final assembly line for Hawk in Saudi Arabia,” said BAE Systems’ international managing director, Guy Griffiths.
“I think it would be self-evident that having established that facility and built 22 Hawk aircraft through it, it would be a great shame if it wasn’t then used for final assembly of other aircraft.”
Saudi Arabia is investing heavily in developing its domestic defense industry as the ongoing war in Yemen drives military spending.
At the same time, the Kingdom aims to create skilled jobs in areas such as aeronautical manufacturing.
“This is all driven by Vision 2030,” said Griffiths. “In every negotiation that’s conducted, whether with us or other defense suppliers, a key component beyond the price and specifications of the product is what is the industrial, training, development and technology transfer contribution that goes with this order? It’s probably the most preeminent part of every negotiation.”
BAE Systems this year delivered the final four aircraft of the 72 planes under its Salam Typhoon program in Saudi Arabia.
It also has a Typhoon support program, and agreed an additional 20,000 flying hours under a contract amendment signed in April.
The company said it had also delivered the first two of 12 Typhoons on order to Oman. The remaining deliveries to Oman are scheduled for the second half of 2017 and 2018.
BAE Systems reported an 11 percent rise in first-half earnings of £945 million ($1.25 billion) on Wednesday, beating analyst estimates.
The earnings were the first to be presented by new Chief Executive Charles Woodburn, who took over from Ian King in July.
The former oil industry executive, who worked for Schlumberger for 15 years, served as chief operating officer at BAE Systems for more than a year before taking up his new role.
He said his leadership will be marked by “evolution, not revolution,” adding: “It’s clear we have the right strategy that harnesses our strengths, so we’ll continue to stay the course.”