REUTERS SUMMIT-Boeing targets doubling of Middle East defence sales

Praveen Menon
Reuters Middle East

(For other news from Reuters Middle East Investment Summit,

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* Mideast defence revenue seen doubling to $4 bln in 2 years

* Gulf customers shopping for F-15 and F-18 jets - Boeing

* Boeing not in talks with UAE on fighter jet deal

* New 777X aircraft to be offered in near term

DUBAI, Nov 20 (Reuters) - Boeing expects to double

revenue from its defence and security business in the Middle

East over the next two years as recent turmoil in the region

drives up demand for arms.

Gulf Arab states and other Middle Eastern countries that

witnessed the Arab Spring uprising are "shopping" for new

high-tech military equipment as they swap out older weaponry and

invest in new capabilities, Jeff Johnson, president of Boeing

Middle East said at the Reuters Middle East Investment Summit.

The U.S. planemaker, which also makes fighter jets,

helicopters and anti-missile technology, expects to increase its

annual revenue from defence in the region to about $4 billion

over the next two years.

That would be part of a wider plan to lessen reliance on

U.S. government work, which is being squeezed by spending cuts.

Boeing's fighter jets as well as the U.S. company's C-17

military transport aircraft have been in strong demand. Last

year, Boeing signed a $29.4 billion deal to sell 84 F-15 fighter

jets to Saudi Arabia, as well as a big defence sale to UAE.

"A lot of customers are shopping for the F-15 and F-18 Super

Hornets and as we introduce more C-17s into the market, we will

continue to see interest in that strategic area too," Johnson


The Middle East accounts for a third of Boeing's

international defence business, Johnson said. This equates to an

annual revenue of about $2 billion.

Asked if demand in the region would result in a doubling of

this figure, Johnson said: "Yes, over the next couple of years.

There is so much interest over a wide range of products."

Revenue for Boeing's defence business was about $31 billion

last year and is expected to be about the same in 2012, with

about 18 percent from its international clients, Johnson said.

"It's a very competitive market. When we see the flattening

of defence budgets in Europe and U.S, emerging markets become

more important and clearly Middle East is up there."

Johnson said high oil prices coupled with threats to the

region were going to allow Gulf armed forces to upgrade their

military resources.

The United Arab Emirates (UAE) had been expected to finalise

a $10 billion deal with Dassault to buy 60 of the

French group's Rafale jets, but talks faltered as the UAE said

the terms were uncompetitive.

Others have also been trying to sell their wares. British

Prime Minister David Cameron visited the UAE earlier this month,

hoping to get it to consider the BAE Systems-built

Eurofighter Typhoon fighter jet.

Boeing is not in active talks with the UAE on this deal.

"We have offered our platforms. If one of those fits the

bill, we will certainly talk to the customer. But we are not in

any kind of active discussions," Johnson said.

Boeing has offered its fighter jets to other Gulf states

including Kuwait, Qatar and Saudi Arabia. Egypt has also been a

top customer for Boeing in defence and commercial planes, and it

has strong trade relations with Jordan and Iraq.


Johnson dismissed concerns that airlines may opt for rival

Airbus' A350-1000 passenger jet if the new version of

Boeing's popular 777 plane is delayed.

"We will have several variants and improvements for the 777

in place before the A350-1000 even hits the market," he said.

Boeing has not yet offered the new version of the 777,

provisionally called the 777X, though carriers such as Emirates

and British Airways have been planning for

it to enter service by the end of this decade.

Boeing appears at least a year away from offering a new

version of the 777, Reuters reported this week.

"I think you'll see it in the near term. I don't know if

near term is tomorrow, next year or two years. But we are going

to stay very close to our customers."

"Our strategy is to stay close, see what they need and we

will roll that out," Johnson said.

Tim Clark, President of Emirates, the largest

customer of the 777, said in November it would consider

replacing its planned fleet of 175 Boeing 777s with the 777X.

"These comments were very reassuring," said Johnson.

"There is demand for the 777X, but what this really comes

down to is the trade-off," he said, suggesting discussion are on

the changes that are being asked for by the customers and what

the planemaker can offer.

He added that Qatar Airways and Abu Dhabi's Etihad Airways

will have a big role in the decision on the new stretched

version of the Dreamliner, the 787-10.

(Additional reporting by Alexander Smith and Amran Abocar;

Editing by Alexander Smith and Mark Potter)

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