Gripen Fighter Jets Rejected by Swiss Voters as $3.5B Saab Deal Busts

Monday, 19 May 2014 08:23 AM

By Michael Mullins

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Gripen fighter jets have been rejected by Swiss voters in a recently held referendum that resulted in the Swedish aerospace and defense company SAAB AB losing some $3.5 billion.

On Sunday, the Swiss government announced that the 22-plane contract, which the nation awarded two and a half years ago to SAAB AB, was canceled after 53.4 percent of voters opposed the contract, Bloomberg News reported. As a result of the decision to not proceed with the contract, SAAB's shares fell as much as 7 percent.

The Swiss Defense Ministry subsequently said it would honor the result of the vote.

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The result is "negative for SAAB, but not exactly unexpected given the opinion polls," Mats Liss, an analyst at Swedbank AB in Stockholm, told Bloomberg.

Opponents to the fighter jet purchase successfully argued that, over the course of the aircraft's lifetime, the 22 planes would cost Swiss tax payers more than $11 billion, which they said would be better put towards education, pensions, and transportation upgrades throughout the historically neutral country.

The result "is a clear victory for budgetary sanity," Regula Rytz, a member of parliament from the Swiss canton of Bern for the Green party, told Bloomberg News.

While the loss was felt by SAAB shareholders, the Swedish company said it will forge ahead with the original plans of producing the 22 next-generation Gripen fighter jets.

Despite the sizeable setback in Switzerland, SAAB AB is said to be constructing the fleet of fighter jets to fulfill another order placed by Brazil last year.

In December 2013, Brazil awarded a $4.5 billion contract to SAAB AB to replace its aging fleet, a surprise coup for the Swedish company after news of the U.S. spying on Brazilians derailed Boeing's chance at the deal, Reuters reported.

The contract, negotiated over the course of three Brazilian presidencies, will ultimately supply Brazil's air force with 36 new Gripen NG fighters by 2020.

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