INTERVIEW-Saab lifts sales forecast for low-cost fighter jet
* Raises long-term sales forecast to 400-450 planes from 300
* Saab's single-engine Gripen jet's price main selling point
* Cost focus an advantage as world army budgets shrink - CEO
Av Bjorn Rundstrom
BROMMA, Sweden, Sept 13 (Reuters) - Swedish fighter jet maker Saab is raising its long-term sales forecast by as much as 50 percent to 450 jets, driven by demand for its low-cost Gripen warplane from cash-strapped governments, its chief executive told Reuters.
The increase suggests a potential windfall for second-tier suppliers as regional powers from Africa to Asia move to arm themselves cheaply against new threats and top Western projects like the U.S. Joint Strike Fighter struggle to contain costs.
With its $2.1 billion market capitalisation, Saab is a minnow in the global aerospace and defence sector, but it survives by making cheaper jets that focus on regional defence.
"Gripen is not designed to go and drop a nuclear bomb 5,000 kilometres away, but to defend itself and its airspace, that is the Swedish military doctrine," said chief executive Hakan Buskhe.
Saab says its single-engine Gripen is cheaper to buy and run than European twin-engine rivals such as Dassault Aviation's Rafale and the Eurofighter Typhoon , a point echoed by Switzerland this week as it closed in on a $3.4 billion deal to buy 22 Gripens.
Saab is lifting its projection of how many planes it can sell following positive feedback from Asia, and with growing interest from Europe, sub-Saharan Africa and South America, Buskhe said in an interview at Saab's headquarters in leafy Bromma, west of Stockholm.
He estimates that globally about 6,000 fighter jets need to be replaced over the next 15-20 years and is increasingly bullish about how many orders Saab can win.
"In spring we said we could sell about 300 jets, but if you ask me today, I can imagine we could add some 100-150 planes to that," Buskhe said.
Saab is working on several warplane deals, including a $4 billion tender for 36 jets in Brazil, where non-NATO Sweden is pushing its neutrality as a selling point.
Last month, following allegations that the United States collected data on Brazilian communications, a source close to the matter told Reuters that Brazil could not award a warplane contract to a country it cannot trust.
Buskhe said he was aware of such reports, but did not want to draw conclusions from them. "We have been in Brazil for 15 years and there have been different discussions with different governments. One should not give this any greater importance; there are other things that matter," he said.
In Brazil, Boeing's F/A-18 Super Hornet is competing with Saab's Gripen and Dassault's Rafale. Industry sources have so far said the U.S. and French jets are seen as front-runners.
ALL ABOUT COST
In the Czech Republic, Sweden is negotiating a deal to extend the lease of Saab jets.
Like most western militaries, the Czech army is facing steep budget cuts, which Buskhe says is an advantage for a "cost-competitive" jet such as the lightweight multi-role Gripen.
Buskhe, who became CEO in 2010 after a career in energy and a CEO job at the Nordic unit of German utility E.ON., said Saab's cost focus was an advantage in times of austerity.
Decades of serving as the prime supplier for the army of a small and non-aligned country have forced Saab to focus on value for money, in part because Sweden does not offer the "cost-plus" contracts common in the defence industry, which guarantee suppliers a profit, rather than holding them to a fixed price.
"The Gripen is without doubt a cost-effective single-engine aircraft, but I would caution that there have been plenty of false dawns," said Francis Tusa, editor of Defence Analysis, referring to the company's confidence about exports.
"There is also a growing view that the Joint Strike Fighter (JSF) is in difficulty and so that might deliver some benefit to other suppliers like the Gripen," he added.
The radar-evading JSF, or Lockheed Martin F-35, is billed as a quantum leap in capability but the $392 billion multinational project has been hit by delays and cost overruns.
Buskhe said he was confident Saab could reach a target of growing its sales organically - without acquisitions - by five percent per year on average throughout the business cycle.
In the past two years, sales have shrunk slightly, but in the first half of this year, Saab's order book grew by 7 billion Swedish crowns to 44 billion crowns ($6.7 billion), which should allow it to reach its sales target.
Asked whether Saab had the research and development muscle to develop a new type of jet to succeed its Gripen series, Buskhe said the firm wanted to stay in the jet fighter market.
"Will we develop something in another 20 years? Yes, I believe so," he said.
Founded in 1937 as an aerospace group, Saab ventured into cars and trucks after World War II, but sold off these businesses more than a decade ago. Today, fighter jets make up about 25 percent of Saab sales, with the rest coming from weaponry and defence electronics.
($1 = 6.5262 Swedish crowns)
(Additional reporting by Tim Hepher; Writing by Geert De Clercq; Editing by Mark Potter)