Brazil's selection of the Saab JAS 39E Gripen as its next fighter secures the future of the Swedish fighter, dealing a blow to the competing Dassault Rafale and Boeing Super Hornet, and strengthening Sweden's chances in future competitions.

Brazil's defense ministry said the Gripen was the least costly contender and also met the country's requirement for sufficient technology transfer to guarantee Brazil's ability to operate and sustain the aircraft independently.

Saab and Dassault had regarded Boeing as their main rival, but the U.S. competitor's chances may have been hurt badly by revelations of U.S. cyber-spying on Brazil.

The 36-aircraft deal is estimated at $4.5 billion including initial support and spares, training, flight simulators, technology transfer and industrial cooperation. The contract should be finalized by December 2014, with the first aircraft to arrive 48 months later.

Saab's Gripen sales director, Eddy de la Motte, said in Rio de Janeiro in April that Sweden's EKN export-import bank would offer Brazil terms under which the customer would not have to make any payments to Saab until the last aircraft in the initial batch had been delivered. After that, Brazil would have 15 years to pay “on flexible terms.”

Saab's leading local partner would have access to source code for the development of upgrades and weapon integration, and would head marketing and assembling of aircraft for Latin American markets, de la Motte said. Brazilian companies would be eligible to bid for up to 80% of the JAS 39E aerostructure work, including components for Swedish aircraft and for export.

On Dec. 17, hours before Brazil's announcement, the Swedish government awarded Saab a $2.5 billion production contract to upgrade 60 JAS 39Cs to the JAS 39E standard—a unit cost of less than $42 million. Industry sources believe that only a few parts of the original aircraft will be reused.

The Swedish JAS 39E program has been contingent on finding another customer. The Swiss parliament approved that nation's order for 22 JAS 39Es, subject to a referendum, expected to pass next year, but it is no longer crucial to the program's future.

If all 118 firm orders are signed, including deliveries to Brazil until 2023 and for Sweden until 2026, the Gripen could have the longest firm order backlog of any fighter by the end of 2014. Other Latin American countries including Colombia and Ecuador are looking at the type.

There are two known factors behind the timing of the deal. The Brazilian air force short-listed the Rafale, Super Hornet and Gripen in 2008, received firm offers in October 2009 and submitted its recommendations in January 2010. Since then, the decision has remained at the presidential level—Dilma Rousseff succeeding Luiz Inacio Lula da Silva in 2011—and competitors have repeatedly been asked to extend their bids, a process that was reaching its practical limit.

The other factor is the aging of Brazil's fighter inventory. The air force retired its Mirage 2000s last week and has increased flying hours on its modernized Northrop F-5EM/FM in compensation. It has acquired 11 ex-Jordanian F-5s which are being upgraded to the same configuration. However, these aircraft will be retired by 2025 and the remaining Alenia/Embraer A-1Ms will be out of service in 2023.

The deal opens the way for a short-term lease of JAS 39C/D Gripens, as included in the Swiss contract, to cover the retirement of the Mirage 2000 and provide lead-in experience for pilots converting to the Gripen. Another advantage of the Gripen should be the straightforward integration of the aircraft into the country's airborne-early-warning capability, also provided by Sweden in the form of a Saab Erieye radar fitted to an Embraer ERJ 145 regional airliner, designated R-99A.

JAS 39E development (so far, a two-seat version has not been funded) was launched by contracts awarded last February and valued at $2.1 billion. The fighter is due to become operational with Sweden and Switzerland in 2018.

The 2007 Gripen Demonstration program paved the way for JAS 39E development. Saab modified a JAS 39D with a GE F414 engine—replacing the F404-based Volvo RM12—and a redesigned mid-body accommodating more fuel. Extensive avionics rig work also was performed. After initial tests in 2008, the Demo aircraft was fitted with prototypes of the Selex-ES Raven ES-05 active, electronically scanned array radar and Skyward-G infrared search-and-track (IRST) system.

The Demo prototype is still flying, to be followed by the first of three JAS 39E development aircraft in 2015. In addition to the Raven—with a gimbaled “repositioner” to provide wide-angle coverage—and the IRST, the JAS 39E has a new electronic-warfare system, and a big-screen cockpit with a single reconfigurable display. A new avionics backbone is intended to provide very robust partitioning between flight-critical functions and the mission system. The aim is a sharp reduction in the time and cost of adding mission functions to the aircraft.

The JAS 39E is being marketed to smaller air forces that cannot afford realistic numbers of more expensive fighters, without sacrificing performance, sensors or weapon capability. Denmark is considering the Gripen, alongside the Eurofighter Typhoon, Super Hornet and JSF, and Belgium is expected to start the process of acquiring an F-16 replacement next year. Saab declined to take part in Canada's new fighter procurement process, but is ready to respond if Canada issues requirements and starts a formal competition.