BAE Systems has won a contract to upgrade South Korean F16 fighter jets. Photograph: Ho/REUTERS
BAE Systems has secured a $1bn (£611m) contract to upgrade South Korea's fleet of F16 fighter jets, in a fillip for the UK arms manufacturer after it lost out on a much more lucrative deal with the United Arab Emirates.
However, there will be no direct benefit for BAE workers in Britain, where the company employs 34,000 people. BAE said it would hire 300 people at its plant in Fort Worth, Texas, to install new cockpit electronics systems, after getting the green light from Korea and the United Statesgovernment, which licenses the sale of the aircraft.
The deal is a coup for BAE, which beat the F16's manufacturer, US defence group Lockheed Martin, for the contract to upgrade the planes, provide training and logistical support. It was also welcome news for BAE after the collapse of a £6bn deal to provide fighter planes to the UAE, and the decision to end shipbuilding in Portsmouth last month. Despite BAE's UK activities grabbing headlines recently, the US remains the group's largest market.
BAE will be upgrading computers, displays, sensors and weapons on South Korea's 130-strong fleet of F16s, an aircraft built in the US in 1976 that has been involved in numerous conflicts, from sorties in the first Gulf war to enforcing the no-fly zone in Libya.
A BAE spokeswoman declined to confirm the value of the contract, but the company has not denied South Korean media reports that the deal is worth $1.1 bn (£670m). The first phase of the work, on design and development, is worth £200m, according to the US Defence Security Cooperation Agency.
"For us it is pretty strategically important, because the aircraft providers usually get the contract for maintenance of the aircraft," the spokeswoman said.
The company now hopes to strike similar deals in continental Europe and Asia. BAE said a number of countries had expressed interest, but declined to give further details.
As well as being one of the main combat jets of the US airforce, the F16 is used by more than two dozen other countries, including Belgium, Taiwan, Iraq, Israel and Venezuela.
BAE's share price rose 1.8% on Monday to 429.7 pence, not enough to recoup Friday's losses when the stock dropped almost 4% on news of the failed UAE deal. The company is striving to bolster an order book that has been depleted by defence cutbacks in the US and the UK, its two largest markets.
Such was the importance of a UAE deal, BAE's chief executive, Ian King, said an agreement would be a "major game changer" for the company.
The UK arms manufacturer revealed after the market closed on Thursday that more than a year of talks to supply 60 Typhoon aircraft to the UAE had failed, despite two visits from prime minister David Cameron.
The prime minister was left embarrassed after the crown prince of Abu Dhabi, Sheikh Mohammed bin Zayed Al Nahyan, opted for a rival fighter jet produced by France's Dassault Systèmes.
The F16 also made headlines recently when US aerospace group Boeing revealed it had retrofitted retired F16s, so they could fly without a pilot.Jennifer Rankin http://www.theguardian.com/
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