In early October 2010, Saab Group announced an SEK 4.5 billion (about $671.5 million) contract to supply its Saab 2000 airborne early warning and control system (AEW&C), which includes “a Saab 2000 aircraft” (singular), to an undisclosed customer. Later reports identified that customer as Saudi Arabia.
This announcement of a Saab 2000 ERIEYE airborne early warning and control system sale is another step toward Saab’s positioning goal as a leading global supplier of mid-tier AEW&C surveillance. As a bonus, Saudi sales also mean ongoing support contracts.
The Market Mystery: AWACS Segment Background
The customer wasn’t initially named, and so an understanding of the global market for aerial surveillance and command planes helped understand narrow the possible buyers. It remains useful to help readers understand this segment.
At present, competitors at the high end of the market include derivatives of the 707-based E-3 Sentry (USA, UK, France, Saudi Arabia), Boeing’s modern E-767 that serves with Japan, the E-737 (Australia, South Korea, and Turkey); and IAI’s Phalcon system which has been installed in 707 (Chile), IL-76 (India), and G550 (Israel, Singapore) jets.
Northrop Grumman’s E-2C Hawkeye turboprop is the lone carrier-capable AWACS system, and serves in that capacity with the US Navy and France’s Marine Nationale. It also serves as a shorter range mid-tier land-based system for Egypt, Japan, Mexico, and Taiwan. NGC’s new E-2D Advanced Hawkeye adds a new radar that offers a significant improvement in range and detection. Once they get the bugs worked out, it will blur the line between mid-tier and high-end competitors.
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Unseating the E-2, which benefits from large US Navy sales, is no easy task. Nevertheless, Saab has now received complete Erieye AEW&C turboprop orders from Sweden, Pakistan, Thailand, and the United Arab Emirates; and supplied its fixed ERIEYE AESA radar and related systems for use on Embraer’s ERJ145-based R-99/EMB-145 AEW&C planes in Brazil, Greece, and Mexico.
The firm continues to look for new customers, and rising wealth outside of North America and Europe is creating opportunities.
Other competitors exist in this segment, but none of them have secured a significant foothold yet. China has made 1 export sale to Pakistan, based on its Yun-8 4-engine turboprop. India is developing its own fixed array AEW&C aircraft that combines Embraer’s EMB-145 jet with its own radar, but hasn’t even begun operational testing for the IAF yet. The most significant new competitor may be European aerospace giant EADS, who teamed up with IAI Elta in 2011 to offer a C295 AEW twin-turboprop based on their popular transport aircraft.
Contracts & Key Events
March 21/13: Support? Saab announces a 5-year, SEK 1.1 billion ($170 million) contract that runs from 2013-2017, and covers “a comprehensive set of spares and support services for a previously delivered system, Saab 2000 AEW&C (Airborne Early Warning & Control).” Unfortunately, “The industry’s nature is such that depending on circumstances concerning the product and customer, information regarding the customer will not be announced.”
The answer seemed obvious. Air forces using Saab turboprop AWACS include Sweden, Thailand and the UAE (Saab 340), and Pakistan and Saudi Arabia (stretched Saab 2000 variant). Pakistan’s sale is well known and hadn’t been secret, so a Saab 2000 AEW&C customer insisting on secrecy must mean… Saudi Arabia.
Except that we might have been wrong. What even the February revelations in Pakistan hadn’t disclosed is that the attack on Minhas AB in Pakistan happened with 3 Erieye planes on the ground. One was destroyed – but 2 others were very badly damaged. That leaves Pakistan with a fleet of just 1 plane, until it gets those 2 fixed. That could explain this $170 million contract, with the sudden secrecy invoked because Pakistan doesn’t want to publicly admit the extent of the loss; indeed, if Saab doesn’t announce a separate SEK 1+ billion support contract soon, the default assumption for this deal must become Pakistan. The problem for Sweden, says Sweden’s Dagens Industri in an April 10/13 article, is that the original purchase was funded by a 2006 credit arrangement of SEK 7.4 billion from the Swedish Export Credit and Export Credits Guarantee Board. Now they’ll have to add SEK 1+ billion to cover this, all to a country that isn’t viewed as a terrific credit risk. Saab Group | Dagens Industri [in Swedish].
Oct 10/10: Saudi Arabia. Swedish media relay reports from Jane’s Defence Weekly that the buyer is, in fact, Saudi Arabia. While Saudi E-3s are getting upgrades, the S-2000 uses next-generation radar technologies that reportedly offer advantages against low/slow targets, with better ground and maritime scanning. That could make it especially useful along the Yemeni front, where Saudi forces have been fighting in recent years.
In response, Sweden’s left-wing political parties are protesting the deal, and making noises about changing Sweden’s export laws to prohibit future Saudi sales. Given Saudi Arabia’s dependence of foreign firms for maintenance, the RSAF could find itself with a future problem if Sweden’s red-green parties succeed. The good news for Saudi Arabia is that the ERIEYE radar itself requires very little maintenance, and the Saab turboprop that carries it is a commercial airplane. As such, any future maintenance problems stemming from a Swedish cutoff would likely center on the plane’s internal electronic systems. Sweden’s The Local | Dagbladet Nyheter [in Swedish]
Oct 4/10: Order. Saab Group:
“Defence and security company Saab has received an order for an airborne surveillance system. The contract amounts to more than 4.5 billion SEK [DID: about $671.5 million]. The order concerns delivery of the Saab 2000 AEW&C (Airborne Early Warning & Control) system, which comprises of a Saab 2000 aircraft equipped with the advanced ERIEYE radar system. The contract also includes ground equipment as well as logistics and support services…. Upon customer’s request, no further information regarding the customer will be announced. The industry’s nature is such that this type of information can not always be published.”
Assuming that the announcement is not misleadingly worded, the discrepancy between the announcement of a single aircraft, and the contract’s price relative to similar orders in the past, suggests a new customer. It also suggests either an accompanying command and control system, extensive maintenance contracts, or both. The secrecy and amounts do create some mystery, because there are a limited number of customers that can afford it, are interested in equipment like this, and can keep a buy of this size undisclosed. Most of them are Middle Eastern countries. At the time, DID said that:
“This kind of contract would suit Saudi Arabia very well, for instance, but the country already operates a fleet of E-3s. Malaysia is interested in aircraft like Saab’s, but the deal’s amount would make it hard to keep under wraps there. Readers with ideas or information are urged to email tips, here at defenseindustrydaily dot com.”
1 S2000 AEW&C
* Saab – Saab 2000 ERIEYE AEW&C
* Airforce Technology – Saab 2000 Airborne Early Warning and Control (AEW&C) Aircraft, Sweden