FLUG REVUE September 2003: Austria signs up for Eurofighter

EUROFIGHTERS FOR AUSTRIA

By Karl Schwarz

On 2 July 2002, the Austrian government announced the decision to purchase the Eurofighter Typhoon as its new air defence aircraft. The then Defence Minister, Herbert Scheibner, stated that the technically best solution had won the day, and moreover EADS had submitted the most attractive offset package. On the basis of 24 interceptors, the Eurofighter package was worth around Euro 1.791 billion, Finance Minister Karl-Heinz Grasser announced to the press.

Eurofighter and Draken

But it was not until a year later, after a flood catastrophe, an election and a lot of flak from the Opposition that on 1 July 2003 the purchase contract between the Federal Ministry of National Defence and Eurofighter GmbH was finally signed. There was a flurry of last-minute activity, as at midnight that Tuesday the commitment period of the offer, which had been initialled on 15 May, was due to expire. However, the contract could not take effect until 6 August, one day after the necessary supplementary finance act had come into force. This was approved on 11 June by the National Council, but then it was put on ice by the Federal Council on 23 June.

Because interest rates have fallen since the announcement in May, the price has fallen by Euro 10 million. It now comes to Euro 1.959 billion. This covers the 18 aircraft (including aircraft cannon and weapons stations), training for pilots and technical staff, logistics, some maintenance and a simulator. The full, fly-away price of a single Eurofighter works out at Euro 62.9 million (altogether Euro 1.121 billion).

The costs of financing the deal have been stated at Euro 292 million. "The Ministry of Finance has agreed a fixed interest rate of 4.488 percent, which is frozen for the entire term (nine years). The original proposal (apportioned over 18 aircraft) included financing costs of about Euro 400 million,” said a Defence Ministry spokesman. The deal will be paid in 18 biannual payments commencing in 2007, and will be met out of the coffers of the Ministry of Finance. These figures do not include the cost of the planned procurement of guided missiles “which can be loaded onto two pairs of Eurofighters on standby within only ten minutes”.

Deliveries of Eurofighters from tranche 2 to Austria will begin in the second quarter of 2007, with four aircraft. Another twelve will follow in 2008, and the remaining two in 2009. Their operating costs will also be partly borne by the Ministry of Finance (the excess over the cost of running the present Drakens). The costs should not exceed Euro 50 million per year.

The change in delivery plan – in July 2002, the first aircraft were to have arrived in 2005 – means that a transitional solution must now be found, as the Draken is to be retired at the end of 2005. Problems could even surface earlier than that date, as the maintenance contract signed in 1998 with the Swedish procurement office, the FMV, expires at the end of the year. Air Commodore Erich Wolf, Commander-in-Chief of the Austrian Air Force, is now pinning his hopes on reaching an agreement directly with Swedish industry. “Remains of spare parts” and certain “publications”, manuals for certain maintenance procedures that are only seldom required are still available. Moreover, sufficient experience has accumulated in Austria from over 15 years of operating with the Draken to be able to safeguard operations as far as possible.

Quite apart from the Draken problem, Vienna is hoping for a “entry package” and for Eurofighter training to commence as early as the end of 2004. To this end, negotiations are to be held with the “reference air forces”. All four Eurofighter nations have stated that they are willing to help. However, every Eurofighter delivered will be urgently needed by the air forces themselves.

At any rate, the Austrian companies which are benefiting from the offsets business to the tune of Euro 4 billion have cause to celebrate. The first contracts totalling Euro 1 billion must be finalised by June 2004. If the obligations are not adhered to by 2018, penalty payments of up to Euro 200 million will become payable.

From FLUG REVUE 9/2003

Last updated 11 August 2003

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