Ruag's F-35 Ambitions Hit a Wall of Costs
The state-owned defense firm will assemble fewer jets than planned, casting doubt on its future business model.
For a state-owned enterprise, ambition is rarely in short supply. Ruag, Switzerland’s defense and aerospace company, christened its grand plan “Project Rigi”: to assemble a portion of the new Swiss F-35 fleet in Emmen, thereby building the expertise to service not only domestic jets but also those of other European nations. It was a bold vision for securing the company's future. Yet, this vision has already collided with the hard arithmetic of international business.
Instead of the four aircraft initially announced, Ruag will now only assemble three. According to multiple sources, the reason is as simple as it is telling: the manufacturer, Lockheed Martin, is unwilling to bear the high cost of having a fourth jet put together in Switzerland. It seems the premium for Swiss precision has its limits, even in the multi-billion-dollar world of advanced fighter jets. This reduction is more than a numerical tweak; it is an early, unwelcome verdict on Ruag's price competitiveness on the global stage.
Of course, the company is putting a brave face on the matter. Ruag’s chairman, Jürg Rötheli, remains circumspect about the final contract details, stating, “We are currently in the final contract negotiations.” He insists that assembling three jets provides sufficient know-how, claiming that “it is not decisive whether it is three, four or five. All our experts confirm this.” One might be forgiven for wondering if those same experts foresaw that their pricing would be unpalatable to their most important partner.
The incident prompts a more fundamental question about Ruag’s entire business model. If the company is too expensive for a guaranteed domestic assembly contract, how does it plan to attract maintenance work from foreign air forces? Mr. Rötheli points to the 800 to 900 F-35s expected in Europe and the continent's single current maintenance hub in Italy. He expresses confidence in positioning Ruag through efficiency gains and mentions exploratory talks with two countries north of Switzerland, who are apparently impressed with Ruag's work on the old F/A-18s.
This optimism, however, cannot obscure the immense pressure on the company. Maintenance for the Swiss Air Force constitutes nearly half of Ruag’s revenue, according to insider estimates. This income stream will largely evaporate in the early 2030s when the current F/A-18 fleet is retired. Securing a significant slice of the F-35 maintenance pie is not a strategic nicety; it is an existential necessity. The path to achieving this, already steep, has just become demonstrably harder.
Written by Thorben Thiede thorben.thiede@alpineweekly.com