What's New With Europe's Fighter Programs?
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Welcome to check six where today we discuss g cap, the european defense budget environment and combat aircraft in the european market more broadly. While much of the attention recent weeks has been on the U. S.

And what the political changes there may mean for defense. There have been several important developments in europe, so we wanted to use this podcast to walk you through some of those. Joining me today are tony osborne, aviation week's london bureau's ef and crag cafe, head of defense markets and data aviation.

K, i'm Robert, well executed editor for defense and space, and your host today. Let's start with the future combat air programs in europe, particularly given the uncertainty about what may be happening in the us with the next generation air dominance program, which is raised questions about what europe will do with its efforts the morning after presidents trump was elected in the U. S, the german defense minister rushed to paris to talk to his french counterpart.

And in their comments after the meeting, they came out strongly in support of their collaboration programs, including f cast, the fighter development that also includes spain. But tony, the italian, japan, U. K. Counterpart to that, the global comment air program, or g cap, seems to have made even more meaningful progress. So why don't you catch us up on that first?

Yes, g cap is making significant progress. I think the last time we probably spoke about this, we were talking about the the ago, which is a strange name for an organization that will essentially run this project. This is a bit like the joint program office for the f thirty five.

But because IT was being set up between three nations, that had to be set up for a treaty. And so each nation's parliaments, each nations lawmakers, had to go through this tree to refine tooth came. But that's now been ratified by ordering nations. And italy was the last to do so.

So in a sense where we're getting now to the point where that organization will be set up as well, a new industrial joint venture between B A systems, ms, specially heavy industries and Leonardo will also be established that will then take orders from this gogo organization, which should be set up in reading of all places where which was announced by our defense minister a kind of weeks back and over. That was actually expected, but he gave evidence to the parliamentary defense committee and mention that this organization will be set up in the the leafy suburb of reading. Are they trying .

to signal they'd be very frugal as that? What IT is.

i'm not really sure, but I mean, it's not really the sort of it's not readings never been really been associated with high tech area space. But but IT is on the old famous m four corridor. So great links with he throw if you need to travel between italy and japan.

That's probably one of the reasons so that they chose that. But M, G, cap is now being prepared, ready for this major contract a sort of mid next year. Mean, back in july, there was talk about whether jcp could be on the chopping block.

The U. K. Is undergoing its strategic defense review. But when you spoke to the industrial leaders back at farra, they were sort of hearten by the fact that labor ministers who had just been elected into post where are coming through looking at this gigantic model of the aircraft ends of giving their nod of approval.

And then in the last few weeks, and there's bins with suggestions from sitting through that, the financial times and then also buy john Haley a few days ago in in in the house of commons defense committee that actually this has got the backing of all the ministers, including prime minister kier stana. So IT looks like this is a program that's going ahead. And IT probably always was.

To be fair, given the try national nature of this project, we didn't want another major embarrassment to know pulling back at becoming more isolationist by withdrawing from such a project. So this this almost looks to go ahead. The big question is how much money gets put into IT.

I think when you and I robot spoke to the possibly in ado farra, he was talking about the project costing forty five billion with between the three nations. But then this is whole question then about saudi abia, the prospect of a fourth nation that the perhaps isn't particularly that the other nations might not be too in amid with heavy on board, but could bring an inordinate amount of money, but without the aviation experience. So this is another room that is going around at the moment.

It's far from certain how saudi arabia ia could join g cap. And we will wait and see in the next few weeks whether this really comes to pass. If somebody aby does join IT would be a remarkable at turn.

We knew that something like this could come along. How IT will happen. The big question.

I mean, interesting to me was I, when this first got a rumor, got seriously rumored, I was talking to some someone on the japanese side about this because to some extent of sadi arabia has also has close ties with the chinese and you would think that would discomfort the the japanese potentially and that he had this person and a very pragmatic attitude is and basically saying, you know, bringing saw uraba ia into the fold would not necessary something that japan would object to or tokyo with Bruce la.

In fact, IT might be an opportunity to try to get saudi arabia a bit out of the chinese orbit. I don't know that's naive or anything, but I was an interesting approach and made me think that maybe initially I thought of the japanese would probably not be OK with this, but they did seem much more relaxed about IT than than I thought. And and as you point out, you know, the money they bring is is a significant with the big question, of course, industrially.

how do you manage IT? And of course, it's given that the the enormous project, the enormity, the process, the technological sort of dances this will bring, I mean sounds will make considerable efforts to sort of yeah I I guess have arranged itself security wise to put to put that ring that wall chinese wall around that, if you like, hopefully with the chinese on the inside of IT. Um so I guess you know when you get on to a program like this is an element of of pride. You can just imagine you the whole vision twenty thirty aspect will be absolutely this will be a major win for that to initiative.

Yeah not for sure. You know these things are fleeting and and, uh, things change a lot. But IT does seem right now that H G cap of the you take the three big six generation fighter programs in the west, so and get M, F, ca, h and you know uh german franco spanish program and and g cap.

G cap does seem the healthiest because even though the french and the the german defense ministers of kind gave a not fcast gf of being important um especially maybe in a trump era kind of a rally and cry for europe to do more together. I mean there are still big questions about the industrial relationship there in the history of obviously with the french on first being part of a european programme and then pulling out and birthday rough all and doing that on their own. I just you know I think there's a lot of questions really whether that's really got IT and then and get you know who knows right now. So H J cap is sitting pretty well.

I I think it's quite telling as well then of the new U K, german relationship through the trinity house. One wonder if if if f cast doesn't go the right way again, whether we could see is of a new g cat relationship of germany in a german that's been rumored for years. It's been sort of talked about. But one one is, you know whether that solves unity house initiated has really been established to throve. Try put sort of the note germany towards us and particularly out IT is even language in the trunk house agreement around sort junks collective combat aircraft and so on, which which makes like interesting well.

and they are in particularly if I just a pick up on your thought. I mean, I I remember being in an event and the the the german senior officer saying to a british senior officer, I don't they realized I was sitting there saying, you know, we we need to do more together because you guys constantly working this was the brit saying to the german, yeah, working with the the french isn't really great and and the german little yeah it's much healthy when we do things together so um and and it's interesting, of course, that the french have now gone off with under the five program for the rifle to to can work on A U cave effort building on the neuron experience in a very interesting program that they were pretty early on. But the german air force has been pretty cleared.

They would like to do something in the way if you want to call IT collaborate combat aircraft arena before f cast even gets filed and you hear the same thing here. So there is a natural alignment there. And I guess we will have to see and we still have german general elections coming up. But where this all all goes, but certainly there is IT does seem like further ground. I couldn't agree .

more and there is progress. I mean, yes, I think the the elections are going to throw a spanner into works earth cast, especially given the fragility of the german government how quickly that comes along. But that could also influence things like additional orders for typhoon.

which I think will get on yeah no for sure. But of course, this is all great to have these wonderful programs, g cap and f gas and I guess and get but as we uh as we all know, someone has to pay for IT. So h so bringing in here are numbers guy, uh create give us a sense for kind of what has been happening in the european defense spending environment.

And I guess I bring that up in part not just because of g cap and f CS, but obviously the two percent issue was such a major point of contention. Uh, the first trust administration and um you know it's not likely to have ve gone away as a talking point at least this time around. So where is europe situated um in twenty twenty five over thinking forward january twenty, twenty twenty five versus twenty sixteen in the the first time um trump moved to the White house.

Yeah a lot. Before again to IT so h back in twenty sixteen. So five years ago, the euro was spending about sixty nine billion dollars a year on procured of defense equipment and today spending something about hundred and forty eight one.

So it's something i'd doubled uh, the parents spend over that period. So there's been a really big changed sentiment. Europe double the market was I was in D C.

Last week and don't give away my age, but i've been talking about defend spending to companies in the U. S. For nearly twenty years and .

only yeah I know I know .

is getting great. That's about seven kids so it's different. But the ah I think the it's the first time I felt like people would genuinely listening to me about europe. Um I think you know this been a complete just a viably kind of a kind of a dismissiveness around um toilful spending in general um outside the U S, but also more particularly about european spending.

And I think there is is still a bit this is this around you know how long this this breasting spending stays in, but it's definitely, you know, genuine interest now because it's becomes a huge market. I mean, it's it's not far. I think the U.

S. Spends about hundred and seventy billion dollars. And so you catching up on that. And it's still probably going to be a little bit more from where IT is in times where compare it's trumps. So twenty sixteen and this is IT was part of my present last week was spending europe, was spending about on after one point three percent of GDP on defense and is now spending two point two percent. And I think you'll go up a little bit further from the next to the years.

I think the other really important when this relates back of premium spending as well, these two nature spending rules is please spend two percent GDP on fence and there is please spend twenty percent of you budget on precured or equipment and on the equipment from the spending they were spending, while fourteen percent in twenty sixteen when from the last president last elected, he said, and then as of now is about thirty three percent. So that's that's more than double. So yeah, so it's changed a lot.

I think I think I think is we ve already had indications that you can read that right? Well, two percent rate, but we need three percent now because you know he's correct that things have changed quite bit since he was asked to about with what's gone on ukraine. I think spending is I mean, if you look at most of the countries they are aiming to get to targets by twenty, thirty, thirty, spending was grow.

But I think going out a really rapid bit of growth now, we're probably grow the drop to something like think it's been about ten percent for last three years, then it'll drop down to probably about three, four percent, I imagine next year. And and there are elements of special budget, so come out poland and and germany beyond that. So I think yeah triple push for three percent is not is not going to happen.

There's no money and we've got the fiscal rules being reimposed as well in europe now. So three maximum deficit now. So it's really hard to get spending any than IT.

But the same time, I think trump in in maybe not in the way, think does help european h eupeptic itals to kind of be spending because now I think you are looking around and you you would say, yes, the us. Is definitely still are spending that we should be interOperable though that so we buy our equipment for that we need to CoOperate with. But are you a little less sn than you were, you know two years ago? The U S. Will turn up to help europe if if russia invades and yeah probably so um see, I think I think the main impacted a trumpton european spending will be to sustain spending at current elevated levels rather than to push on my 车 的。

And I thought quite interesting in recent weeks， uh, what happened here in the U. K, the U. K.

The government has pledge to you raise, defend spending further two point five percent of GDP at some point, not spell out when. But what I think is quite interesting is even as they do that, they are realizing. And I think other this will happening or is happening in other M O S in europe.

Two, you know, getting more money doesn't necessarily solve all your problem so you still have face tough choice, right? And uh until in you can can walk walk us through that. I mean the U K, even before the state gic defense review done, has kind of announced that um you know yeah we look on the government has told us we're onna get more money, but that doesn't mean we don't have to do difficult things. And maybe just catch up some of our listeners on on those decisions.

yes. So couple of weeks go long before the sdr is even published. Um U K. Has already decided IT will scrap its humer helicopter fleet.

It's chinny s and also interestingly, the watchkeeper a fleet, although the watchkeeper of U S. But have a trouble, some beast. I think it's going to be missed by many people.

But the fact that we are already getting rid of some capabilities, including some, some warships and some, some support ships, would suggest this as an eager ist to sort of trying at least make a few more savings before before the sdr. But also, these are old capabilities. I think some were reluctant just simply scrap and say we don't we don't need this.

And when you take aircraft of the books, you practically IT less strong. IT doesn't looks so good politically. And maybe the previous government wasn't sicking on doing that. The new government coming in has done that. And actually a few former conservative mp said, yeah, that that wasn't a bad thing.

And that saves up about sort of five hundred million over the next five years, which is small beans compared to the sort of billions that we are talking about. And also the other interesting thing, and I think will probably talk about this, is that the U. K. The arch wants to get rid of the hawk tee to jet trainer and that's I think that's going to Spark off some a great deal of interest in, in the coming months as again before the sdr.

Yeah and speaking of appetite, I mean, they've ve been pretty clear recent months, uh, ayr missile defense needs more money again, not in not an area that comes cheap necessarily or is done quickly. So uh, you can definitely see why there's a need for belt typing even if you're getting a you're hoping to get more money.

I think that I will depends on how you end up doing IT. Does the immediate pends if you are gona end up investing in these expensive ground based are defences, things like patric sampo can or whatever, or you approach IT in a different way. And I think the U.

K. Wants to go down this route, but not necessarily by buying expensive based defense systems like germany. Component has.

I think they would like to try avoid dad if possible because you it's it's it's a fix system once it's installed and you don't get much other use out of IT like like you do with with another system like combat aircraft. Ft, so I think they're going to try and go down this international approach, if they can. But maybe that could include the sort of the german LED initiatives like the european defense CoOperation student support. We talked a lot .

about the future on the aircraft programs at the start of this podcast, but obviously there are some big programs that are still going on here in europe. They are involved buying european eurofighter typhoon um raf all in france or other countries in european rafle and then and then of course, lot of f thirty five buying so so craig, maybe just kind of catch us up how you see the uh the fighter market right now here in europe.

Yeah it's really interesting one because you are kind of looking towards the end of of typhoon production before the russian invasion of ukraine and and the following slow down little bit. But this you know it's kind of two completely different stories, say time thing is kind of rain revived by it's spain by everyone is looking at top of by germany's, looking at additional buys profile being before the the ukraine thing, you know, they didn't very well on export orders. So there is now looking production of both types going into thirty, which I think when we thought we would be a few years back.

So these two programs doing what really well and they start to look that they're to staying fire production in europe, I think kind of an assumption that be a bit of the gap between production of those aircraft and then the next generation coming online. But that doesn't necessarily look like is the case. And this there's a lot of campaigns running out there at the moment.

I know that you can seem pretty happy about trying to get turkey on about typhoon and as well. So this yeah, it's looking a bit more rosy for the for the first market. And like you say, I think you know is the us pushes its program back the n gad and and F A X X as well.

And you looks like it's probably on pretty level terms in sense. If if if kind of lead in the market, I think get going back talking about a little earlier. I wonder how happy europe pees about that because I get the impression, especially when you look at the six generation. So you look at in the past, you third, fourth, five generation he did was you made a Better version of a fighter aircrafts with new technologies in there.

And I think this is this new on the reason I think that everyone occasionally seems a bit panicking about IT is it's not really just about the fight terc if it's the whole system system thing, which sounds like join, but it's absolutely what everyone's trying to do and it's really hard to figure out how you how you switch that and also is a love institutional kind of bias i'm i'm going to use with bias towards um you know right? Well, we obviously is focus on the the coming at raft and I think maybe that's where to some extent the U. S.

Has found itself, which is like we know we ve thought so much about this. But right, well, you know, now we're moving along with ccs. Is that really how we need to do this doing to get the unit cost? How do we actually be a wasting programs are delivered, want to deliver a more mass um because you know fight tilly is been shopping for years and and and then you know I think every you know the U S.

Has taken a step back if I was g cap in the lead. Now it's so obviously an opportunity, especially when you look at expert markets. But I think it's also you made me a love, a nervous.

Because you can be like, well, what the U. S. Doing because they're doing they are doing stuff, but they taking a step back and stuff as well if if there you to takes that back and maybe pushing on my head.

But yeah I think you know fight market, this planning requirements out there in europe, you know planning production, the problem really is, you know keep your production going in this capacity issue while the demand issue in europe. I think the other thing to think about that we never think about because no sexy but say, yes, fires reactive sales is everyone looking increasing availability rates for the right as well. So you big problem in the fast much space.

There were some of that driven by industrial action, some of that driven by country just not buying enough stairs. And how does how does these production lines build enough spare at the same time they trying to rap up production rates for fair craft? There is a lot going on, but it's so yeah, if you are in the fight sector in europe, you'd be pretty happy with the tony.

What's your what's your kind of got feeling on H U K and additional typhoon by um where do you think I mean you don't ask ask you to make a call on numbers or e or f thirty five numbers. But uh, do you think we'll finally get a bit more clarity out of sdr in the coming weeks for months? I guess I .

think my conclusion would be no more typhoon bias for the U. K. I think that's almost one hundred percent. I think if we are going to spend more money on fighters, it's going to be g cap, and it's going to be additional top up of their thirty five, that city where the same in the direction everyone seems to be going. We're gona be up to forty eight, thirty five sort of later this decade, around twenty six, twenty seven.

We're going need, at least in others, twenty, twenty five, twenty six aircraft to ensure that we have jets for those Carriers so that that's where the money is going, that the rest will be focused on entirely on g cap and you a fighter upgrades. There is a, there is a letter to the parliamentary defence defense committee from unions working in B A systems warton for an additional buy of typhoon's to keep that gap between typhoon production, that is, for the final assembly fruit g cap. But that's not actually necessary because when you look at IT, you go, well, germany buying more typhoons, spain is buying two batches of typhoons, and italy is is also now ordered IT, or is about to order another batch to replace trench one.

So B, A system is going to be busy just building the major units for those aircraft. Ba systems build no thirty percent of of each chair plane, so even though they not could be a building uh undertaking final assembly, they are gonna building major units, all the extra hundred old luter typhoon's anyway. And of course as the export contracts because if saudi abbia comes on the jeep up programme, they've almost undoubtedly gone to buy those additional forty eight to fifty four typhoons that we've been talking about since two thousand and seventeen, that sort of batch two fleet.

And then as craig mentioned, you've got potential order from turkey, which would be absolutely significant in which germany is now given approval for secret briefings about so that begins to move that down negotiation processor a bit further. And the text parliament's been very clear that the defense minister very clear that the typhoon is very on the table for him. They've decided to abandon a an upgrade program for us sixteen s and focus that nationally because they can do IT cheap.

And they say so that freeze up how of a lot of money for both typhoon and also their development of cn. There's a lot going on in in the world of typhoon and we've discuss rafle. I don't see many more european opportunities coming up for rafle.

I think you ve got greeks, you've got the creations. I think now you will be focused on getting french production out. You'll see the french halted deliveries for a long time now. Now they sort of going to take deliveries of their remaining their remaining fleets and get those upgrade programs going. Presume with the united, our abandons you working very closely with them .

on that yeah and meanwhile, sweden keeps kind of doing its thing, and we all await what the future plan there is.

Yeah, twenty thirty is the date for again when the speech government will make a decision. But I mean, all parliamentary hearings will be been very positive. Sweden needs to retain the liability to produce fighters. And whether that's uncrushed crude is is a different yeah I mean, this definitely significant, interesting maintaining that capability in the country.

I mean, create kind of this kind of incredible we've gone to talk from talking about how long can europe sustain these production lines to how can they find production slots for, for some of the demand that at least foreseeable demand and this kind of as you would send these, say, these programs are kind of coming to the end of their life, kind of incredible theyve never been healthier almost.

And don't forget to me, we are now there's active discussions about how you develop the midlife update for typhoon because it's really only half way through its life that, that is gonna the next major step. And there's also the whole issue, industrial capacity for the next wave of upgrades for the aircraft. You're got the P F E programme coming up towards the end of this decade. There's going to put a hello, a lot of additional capability on the airplane. Yeah, I think think there's a whole lot of chAllenges coming fit for your fight.

One very good. I think let's rapid there. I hope for our listeners.

I was a good catch up on what's going up on in europe and to show that, uh, even as we wait for new developments in the U. S, there's plenty to keep everyone busy. And with that, thanks for checking in to check six. Thanks, tony. Thanks, craig, and thanks, guy, for producing this podcast, and we look forward to having you back sometime soon on our next check sex.