Saab expects to ink deal for new generation of submarines for Sweden

Karl Skrona, Reuters
30 April 2015


Sweden's Saab expects to receive a firm production contract from the government for a new generation of submarines within months and is finalising negotiations for the mid-life upgrade of the Gotland class, executives said on Thursday.
Sweden agreed last month to order two new A26 subs from Saab , which last year bought the marine defence unit of ThyssenKrupp and renamed it Saab Kockums.
"We are negotiating now on A26, I would expect something in a matter of months," Gunilla Fransson, head of security and defence solutions at the Swedish defence firm, said.
The defence ministry has set aside some 11.2 billion Swedish crowns ($1.4 billion) for underwater defence projects including the 8.2 billion-crown submarine purchase as well as major modifications to the 1990s Gotland subs and a new lightweight torpedo.
Saab, maker of Gripen fighter jets and military equipment ranging from missiles to radar systems, aims to expand its naval activities and help Sweden meet its needs for the design, production and maintenance of submarines and warships.
The government has asked Saab to come up with a strategy to support Swedish submarine naval forces, but Fransson said the Kockums purchase made sense as a standalone business case.
Sweden, which used to own Kockums directly, had been seeking ways to share development costs with other potential buyers of its A26 submarine but failed to agree on commercial terms with ThyssenKrupp, which also builds submarines separately.
Saab's naval activities accounted for some 14 percent of its revenues in 2014.
The Swedish company sees export potential for the A26 in Netherlands, where it has partnered with Damen shipyards, as well as Norway and Poland, but suffered a setback when it was excluded from a major competition in Australia.
Fransson said Saab could still win some of the project to replace Australia's Collins-class submarines as a supplier or partner.
"Winning as prime contractor looks unlikely, but I still believe there are other opportunities," she said.
Saab executives said the Gotland upgrade would extend the life of the 1990s submarine class beyond 2025, with improved surveillance and power systems.
A final contract for that work is expected by mid-year.
Saab said it was also in the final stages of picking suppliers for the mid-life overhaul, which would see the first sub enter its yards in early 2016 for two years of modifications that include breaking the subs in two to install new hardware.