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Swiss to Buy 34 McDonnell Fighters : $1.9-Billion Hornet Order Tops Bid by General Dynamics

From Reuters

McDonnell Douglas Corp. has won a 3-billion Swiss franc ($1.9 billion U.S.) contract to provide Switzerland’s next generation of fighter aircraft, beating rival General Dynamics Corp., Defense Minister Arnold Koller said Monday.

Switzerland’s armed forces will buy 34 F/A-18C Hornet fighter planes from McDonnell Douglas, Koller said.

Although General Dynamics’ F-16 Fighting Falcon--the other finalist put to a five-week air test--costs 15% less than the Hornet, the F/A-18 was better suited to defend Swiss airspace, Koller said.

The Hornet also offers more subcontracting work for the Swiss defense industry and greater potential for upgrading its fighting prowess, he said. The Hornets will replace Switzerland’s Mirage interceptors, made by Avions Marcel Dassault-Breguet Aviation of France.

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The Swiss purchase decision was made by its federal council, the country’s highest executive body, and still needs approval by Parliament, Koller said, although he said it was inconceivable that the McDonnell victory would be reversed.

“Our thorough evaluation precludes any further review of the selection of this type of plane,” Koller said. The vote will probably take place in 1990, he said, with the planes deployed by the mid-1990s.

The Swiss purchase comes as much needed good news for St. Louis-based McDonnell, as the company’s military aircraft unit has been suffering from cutbacks in military spending and fierce competition for new U.S. government contracts.

Although McDonnell received $7.7 billion in 1987 contracts, sales of its combat-aircraft division have fallen slightly. The Pentagon has announced plans to reduce its orders for the F/A-18 Hornet beginning in 1989 and is also cutting purchases of McDonnell’s F-15 Eagle.

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Also, the company’s F-18 attack plane and Apache helicopter have suffered quality-control problems.

McDonnell has been enjoying some success on its commercial aircraft side. Last month, Delta Air Lines took orders and options on $6 billion worth of McDonnell aircraft, including its three-engine MD-11 aircraft and twin-engine MD-88s. The Scandinavian Airline System placed a $1.5-billion order with the aerospace company in June, in McDonnell’s second-largest order ever.

But McDonnell’s commercial division also has lost some key bids. This summer the company lost a $5-billion order from the International Lease Finance Corp.--which went to Seattle-based Boeing Co. and Airbus Industrie of Europe. Boeing also beat out McDonnell for large orders from American and United Airlines in May.

Shares of McDonnell Douglas rose 50 cents in New York Stock Exchange Trading to close at $70.125.


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