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On the Record With
ALOYSIUS RAUEN, CEO, EUROFIGHTER JAGDFLUGZEUG GMBH
There isn't going to be a signature ceremony for the Eurofighter Tranche 2 contract during Farnborough but Aloysius Rauen says that agreement on this critical phase of the program is needed soon, otherwise the Eurofighter project will be in jeopardy. At issue is the Supplement 3 clause of the overarching Tranche 2 contract, covering Eurofighter's essential next production phase. If there is not a smooth transition from Tranche 1 to Tranche 2 build work, the resulting production gap will be a serious problem.
Says Rauen, "We are in intense negotiations with NETMA right now and we know the same negotiations are going on at a national level—largely in Britain and Italy, as the other two partners have concluded theirs. What we need is a commitment by the end of July and all the nations say, yes, that is the target." Rauen recognizes that we've been here before. "There was a previous target to sign at the end of last year but there were considerable doubts that certain members of the club were going to be able to make that happen," he says. "There is still no guarantee—the only guarantee comes with the commitment." Rauen says that Eurofighter doesn't even need a contract. He can wait a little longer for the final precise deals to be signed off, but a Supplement 3 commitment "would be enough to take to any bank in the world," he says with a smile.
"If we miss the July deadline we are staring at a production gap, and we all know that makes everything more expensive. Industrial capacities become stretched and it will be very difficult for small suppliers to keep in touch with the program. The do not have the flexibility to get back on track. For sure it will be more expensive." Rauen attaches no blame to any particular group "I know everyone is working hard and, to be frank, this is not exactly a new situation for us. What is new is the level of urgency."
There has been much speculation about the UK's future intentions—when will it find the cash for Tranche 2 and will the full buy of RAF aircraft (to the end of Tranche 3) be exercised? Rauen is definitive about this "We have an umbrella contract for 620 aircraft plus 90 options. That is the legal basis on which we are proceeding, on which all of our costs have been calculated. I have no reason to believe that one partner wants to get out of this agreement, and the British customer has confirmed again and again that the number of aircraft in Tranche 2 is not an issue." The issue for the UK is one of capability and how to fund the earlier introduction of an enhanced air-to-ground capability for late Tranche 1 and early Tranche 2 aircraft.
Tranche 3 however remains undiscussed. "The customer has not debated Tranche 3 with us at all," Rauen notes, adding, "All of our pricing for Tranche 1 and 2 have been based on the umbrella contract. If you unwrap that agreement it does have implications for the price." Eurofighter is at Chalet A37-38 and OE9.
—Robert Hewson
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