Defence giant BAE Systems in major Typhoon contract win with Qatar

● Defence Minister Fallon hails new milestone in countries’ defence links

Shares in BAE Systems flirted with two-month highs yesterday after the UK Government confirmed that Qatar has signed a letter of intent to buy 24 Typhoon aircraft from Britain.

No figure was put on the deal, but City defence analysts said it was likely to be “significant”, citing a likely price of more than £1 billion.the agreement was signed on Sunday by Qatar’s defence minister during a visit to the Gulf state by British counterpart Sir Michael Fallon, the latter saying that it marked the UK’S first major defence contract with Qatar.

Fallon said in a statement: “This is an important moment in our defence relationship and the basis for even closer defence co-operation between our two countries.

“We also hope that this will help enhance security within the region across all Gulf allies and enhance Typhoon inter-operability across the GCC (Gulf Co-operation Council).”

The news boosted the share price of aerospace defence firm BAE Systems, which is set to manufacture the 24 jets out of its plant in Lancashire.

Shares in the FTSE 100-listed company rose 3 per cent, or 18.5p, to a near-two month high of 614.5p before closing .

The Typhoon deal comes as Qatar is embroiled in an acrimonious trade boycott of the country by Saudi Arabia, Bahrain, the United Arab Emirates and Egypt. Britain’s largest defence company said in a statement: “BAE Systems welcomes a formal Statement of Intent between the governments of the UK and Qatar signed today in Doha on the potential purchase of 24 Typhoon aircraft for the future military and training requirements of the Qatar Armed Forces.

“Discussions are ongoing and it would be inappropriate to comment further at this time”.

David Madden, a market analyst at CMC Markets UK, said that, while the value of the sale was not disclosed, it was “likely to be in excess of £1 billion”. The resulting share price boost has helped BAE Systems recover from the knock it took in August, when it announced that it would take a restructuring charge for its intelligence division.

“That announcement sent the stock to a six-month low,” Mr Madden said.

However, interest in the firm has continued to build.

“Lastmonth,goldmansachs added the stock to its conviction buy list, sighting Saudi Arabian contracts as the reason behind the move, and now they are selling to Qatar too,” Madden added.