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PARIS: French officials scrambled on Monday to avoid a rift with one of the world's biggest arms buyers after prematurely announcing a deal to supply Saudi Arabia with refuelling tanker planes.
The French defence ministry announced that Defence Minister Michele Alliot-Marie and Saudi Crown Prince Sultan Abdul-Aziz had signed the strategically important agreement to supply Airbus MRTT tankers in a deal worth 350-400 million euros.
Less then two hours later it released a second statement, changing course: “Discussions between France and Saudi Arabia relating to the contract for MRTT are continuing.”
MRTT is the Multi-Role Tanker Transport, which refers to converted passenger jets that that can be used for refuelling or carrying troops.
The French ministry's U-turn appeared to be driven mainly by fears of breaching Saudi sensitivities over the timing of an announcement, with defence industry officials confirming a deal with Saudi Arabia was in the pipeline.
“It's a question of protocol,” said a French defence industry source familiar with the matter.
French government officials were clearly flustered by the slip-up. Saudi officials were unavailable for comment.
Airbus parent EADS said the deal related to two air tankers, which are adapted for fuel and troop transport use from the A330, one of Airbus's wide-body passenger planes.
The company declined to comment in further detail.
TANKER COMPETITION
A deal, if reached, would mark a strategic victory for Airbus in its bid to crack the military tanker market, which is dominated by U.S. firm Boeing Co..
Airbus parent EADS has teamed up with Northrop Grumman Corp. <NOC.N> to bid jointly against Boeing in a $40 billion U.S. competition for new tankers.
Airbus has yet to fly a fully equipped A330 refuelling plane but announced last month that a boom system set to go on the aircraft had been flown on an older Airbus A310 plane.
Canada has two A310 MRTTs and Germany has three.
Saudi Arabia is one of the world's biggest arms buyers and a key target of French companies including Dassault Aviation <AVMD.PA>, which has offered its Rafale fighter to the kingdom.
The United States represents by far the largest market for tankers. Washington is looking to buy 179 planes in the first part of a programme to replace more than 500 aging KC-135 tankers. A decision is expected this year.
Boeing, which had previously won the contract only to have it revoked due to malpractice allegations, confirmed on Monday it was offering a version of its 767 jetliner in the new tender.
Airbus's approach involves A330 airliners built in Toulouse and then refitted by CASA of Spain, one of the companies that founded EADS in 2000, at its Getafe site near Madrid.
Casa in June started to convert A330s into the Multi Role Tanker Transport (MRTT) for the Royal Australian Air Force which had ordered five of the aircraft worth some 825 million euros.
Britain is also in negotiations with EADS as part of a consortium looking to use A330 MRTTs for refuelling Royal Air Force planes under a 27-year outsourcing contract.
Monday's episode was not the first time in recent memory that France has had to retract a key defence announcement.
In 2005, President Jacques Chirac announced Europe's biggest naval project in the shape of a joint frigate building programme during a Franco-Italian summit with Silvio Berlusconi.
But his officials had to retract Chirac's words when it emerged that Italy's finance ministry had vetoed the deal at the last moment. The joint warship plan was subsequently reinstated.
(Additional reporting by Jason Neely, Tim Hepher, Marcel Michelson)
