An Italian aerospace company's campaign to sell 48 trainer jets and light attack aircraft to the UAE is under pressure after a high-level delegation visited South Korean defence companies last month, including the offices of its arch-rival. Alenia Aermacchi, part of the Finmeccanica group, was selected in February last year to provide its M-346 trainer to the UAE Air Force, edging out Korea Aerospace Industries (KAI) and its T-50 Golden Eagle.
The UAE needs trainers to prepare pilots for its advanced fighter jets, such as the Dassault Mirage and the F-16. But after a year of negotiations the two sides have still not signed a contract, fuelling speculation that the deal is in jeopardy. "The deal was not signed as it was supposed to be during the Dubai Air Show last November, and therefore there is trouble," said Riad Kahwaji, the chief executive of the Institute for Near East and Gulf Military Analysis in Dubai. Korea's chances appear to have strengthened following the high-profile visit to the defence companies late last month by Lt Gen Hamad Mohammed Thani al Rumaithi, the Chief of Staff of the UAE Armed Forces.
The visit came after a South Korean consortium won a US$20 billion (Dh73.45bn) nuclear energy deal in the UAE last December, as well as other contracts totalling at least $15bn. The military delegation focused on promoting defence industry collaboration as well as military exchanges, training and education, according to reports. Lt Gen al Rumaithi is believed to have spent a day at the offices of KAI, which developed the T-50 Golden Eagle in partnership with Lockheed Martin. The aircraft is loosely derived from the F-16. Pier Francesco Guarguaglini, the president and chief executive of Finmeccanica, has dismissed speculation that his company might lose the deal after the Korea visit.
"We are still discussing on the M-346 with the United Arab Emirates and we are confident to obtain the contract within 2010," he said. Industry officials said if the UAE planned to open negotiations with the Koreans it would, according to custom, announce that it had terminated discussions with Alenia and state its intention to work with KAI. Craig Caffrey, an analyst with the military aircraft programme at UK-based Jane's Defence Forecasts, said Alenia was still favoured to win the deal. "It seems that the UAE still plans to acquire the M-346 and that this recent talk of a potential re-opening of negotiations for the purchase of the T-50 may simply be aimed at putting pressure on the contract negotiations with Aermacchi," he said.
"A spokesman from South Korea's Defence Acquisition Programme Administration told Jane's in late January that it had received 'no formal request' from the UAE about renewed efforts to acquire the T-50, so it seems the option was certainly not being pursued seriously at that point. I expect that a contract will eventually be finalised for the M-346." Officials from KAI were unavailable for comment.
Negotiations with the Italians are believed to have reached an impasse over the transfer of technology to UAE industry, Mr Kahwaji said. "The snag was over the UAE being able to carry out part of the programme inside the UAE, such as giving licence to some UAE companies to do some parts for the planes, maintenance and these kinds of things. It might not be the whole story, but this is a part of it."
The UAE needs to replace its ageing Hawk trainers from BAE Systems, which are due to be phased out by 2015. BAE's latest version of the Hawk was eliminated from the selection process in 2007, leaving only the Italian and Korean entries. The Golden Eagle reportedly costs between $13.5 million and $17m each, compared with the M-346 at between $12.5m and $13.5m. Negotiations for the trainer come amid a wave of military spending to upgrade the UAE's defence capabilities, with contracts signed in the past two years for marine patrol planes, heavy lift cargo aircraft and aerial reconnaissance planes.