SAAB Is Struggling

(MoneyWatch)  As we have discussed in the past Sweden's sole aerospace company, SAAB, has been agressivley marketing the Gripen in Asia and Europe. With several NATO countries looking to replace their F-16 fleets in the near future the Gripen has been submitted to Norway, Denmark and Holland. It has also been suggested for the new Indian fighter and possibly for Greece's use as well.

Unfortunately for that company there haven't been many sales. Sweden has certainly invested in a fleet of the modern jet fighter, but so far none of the NATO countries have purchased any. Bloomberg is reporting that without further sales to other countries the production line will probably shut down in the 2012 time frame. This will deal a further blow to a struggling Swedish industrial base. Already GM is looking at selling the SAAB car for just about any amount of money to anybody. Volvo will lose business as they make the engine for the aircraft.

One solution would be for the Swedish government to invest in further aircraft but at the current unit price that is not a realistic solution. SAAB is hoping that one of the Asian countries that it is marketing to will make a buy. Unlike Boeing or EADS, SAAB is faced with dealing with a limited domestic market. They need to continue a pace of foreign sales if they want to keep the production line and revenue going. Not only that there will be little business for several years as nations absorb the latest generation of fighters -- be they F-35, Typhoons or Gripens.

Unfortunately the modern combat aircraft market has tended to move in generations. The F-15, F-16 and F/A-18 were the last along with the Tornado and the Mirage 2000. There was a wave of purchases in the late Seventies and Eighties. Significant work did exist in upgrading and modifying these aircraft as well as keeping them maintained and active. Now the next generation of aircraft are coming in. It won't be probably until well after 2020 that a new group of aircraft will be developed and fielded. SAAB needs to keep going as a viable concern until that next generation is ready.