Bring Down Price or Cancel Caracal Contract: U.A.E. to Airbus Helicopters

After months of strained negotiations, the United Arab Emirates (U.A.E.) has issued a stark ultimatum to Airbus Helicopters: either bring down the price of the Caracal contract or face cancellation.

The U.A.E., a significant customer for Airbus Helicopters, had entered into a contract for the purchase of 12 Caracal helicopters, but disagreements over pricing have escalated tensions between the two parties. The contract, originally valued between €750-800 million, is now the subject of intense scrutiny as the U.A.E. seeks to slash the cost to €620 million.

Sources close to the matter revealed to French publication LA Tribune that approximately three weeks ago, Abu Dhabi dispatched a letter to Airbus Helicopters formally requesting the cancellation of the contract. Despite this, Airbus Helicopters maintains that the contract remains in force, refraining from commenting on the ongoing discussions with their client.

The demands from the U.A.E. extend beyond mere financial concessions. In addition to the price reduction, the U.A.E. has pressed for expedited delivery, an extended support duration by ten years, and technology transfers. Furthermore, they have expressed a preference for integrating Israeli Spike missiles or missiles from the Emirati group Halcon onto the Caracal helicopters, a move that Airbus Helicopters has found challenging to accommodate due to profitability concerns.

Airbus Helicopters CEO, Bruno Even, has personally engaged in negotiations in an effort to salvage the contract. In a recent interview during the Dubai trade fair, Even emphasized the strategic importance of maintaining a positive relationship with the U.A.E. and executing the Caracal contract as originally planned.

“We have known the U.A.E. customer for over 40 years. They fly many Airbus Helicopters. The Caracal contract has a strategic dimension because it is an opportunity for the U.A.E. client, as for us, to reaffirm our partnership for future years,” Even added.

The potential cancellation of the Caracal contract marks a significant setback for Airbus Helicopters, with implications for their future dealings in the region. Despite offering alternatives such as NH90 helicopters manufactured in collaboration with Leonardo and Dutch Fokker, the company faces an uncertain future as negotiations with the U.A.E. continue to hang in the balance.c