Saab Group was dealt a major blow this week as Swiss voters halted a plan to order the company’s Gripen fighter jets. The deal had been worth an estimated $3.5 billion.
The deal stems from a February 2013 agreement between the Saab, the Swedish Defence Materiel Administration, and the Swiss Defense Ministry. Under the terms of the deal Saab was to have developed and provided 60 Gripen E fighter jets to Sweden and 22 of the jets to Switzerland. According to Saab, the jets bound for Sweden are still in production and on schedule for delivery in 2018. Saab is also in the process of formalizing a deal to deliver 36 Gripen’s to Brazil.
A majority of Swiss voters (over 53%) voted against the proposed Gripen deal. According to a Bloomberg report, opposition to the deal hung on estimates that the jets could cost more than $11 billion throughout their period of service. The Swiss Defense Ministry has indicated that it will follow the directive of the vote and cancel the deal.
“Our focus is helping countries protect their ways of life, which we do by serving the global market with world-leading products, including Gripen,” said Hakan Buskhe, CEO of Saab. “We have seen in Switzerland support for Gripen, including through its evaluation and selection over competitors and in the votations in the Swiss Parliament last year.
“We respect the process in Switzerland and do not comment on today’s outcome in the referendum. Following selection in 2011, hundreds of business relationships in Switzerland have been created through the Swiss Industrial Participation program, which was created in relation to the Gripen E procurement. These are relationships we look forward to continuing as long as possible,” adds Håkan Buskhe.
Saab stock fell significantly following the vote, falling as much as 7% according to Bloomberg.
In addition to the Gripen vote, Swiss voters also rejected a proposed law to set their country’s minimum wage at almost $25. The raise would have given Switzerland the highest minimum wage in the world.
Image via Saab