The Understanding Document signed by the Governments of the United Kingdom (UKG) and the Kingdom of Saudi Arabia (KSA) in 2005 included provision for the Typhoon aircraft acquisition by the KSA to be at 2005 economic conditions.
Both Governments have now agreed price escalation terms relating to the Typhoon aircraft under the Salam programme and these have been reflected in contractual arrangements between the UKG and BAE Systems. The terms of the agreement are broadly consistent with the Group's prior trading outlook for 2013.
Cash settlement is expected to follow this pricing agreement, commencing in the early part of 2014.
Ian King, Chief Executive, BAE Systems, said: "This is an equitable outcome for all parties, I am pleased that we have been able to conclude this negotiation which builds on our long standing relationship with this much valued customer".