Saab announced that it has signed a contract with the Swedish Defence Materiel Administration, FMV, for 16 Gripen E fighter aircraft for Ukraine, with an order value of ~25 BSEK. We view this as highly positive, although somewhat expected, given the joint political intent communicated in May. The contract secures a substantial baseload for Aeronautics into the next decade and establishes Ukraine as a new, potentially long-term Gripen operator. As we had only partly included this unconfirmed order in our numbers, the formal signing will trigger upward revisions to our order intake and medium- to long-term estimates. We expect to make these revisions by our Q2 earnings preview at the latest. The changes are material and reinforce our already positive fundamental view of the company.

Filling the order book without bending the price

The contract value of ~25 BSEK for 16 aircraft, including spare parts and support equipment, comes in slightly above the implied aircraft value in our previous rough estimates. For context, the order equals ~9% of Saab’s Q1’26 backlog of ~274 BSEK and ~30% of group LTM revenue of ~82.5 BSEK. Relative to Aeronautics, which generated ~19.8 BSEK of LTM revenue, the order represents more than a full year of divisional sales. This gives Aeronautics strong long-term visibility and helps spread fixed costs over a larger production base, which in our view should over time support profitability through improved operating leverage. Moreover, the contract implies a value of ~1.6 BSEK, or ~140 MEUR, per aircraft. That is broadly in line with the ~140-150 MEUR range we have used as reference for similar Gripen export packages, such as Brazil and Thailand.

Low margins off the line but a richer tail in sustainment

Beyond the headline value, we believe the contract's strategic importance lies in its long tail, as is typical for platforms of this kind. Fighter aircraft operate for around 30 years and generate recurring revenue from maintenance, spares, software updates, and mid-life upgrades long after delivery. Combat-operated fleets consume spares at a higher rate, which, as we have noted before, should support structurally higher-margin aftermarket revenue over time. The initial 16 aircraft have the potential to also seed a larger Ukrainian Gripen fleet as the country rebuilds its air force.

On margins, over the build phase, we expect new-builds to start near Aeronautics’ current EBIT margin of ~6%, which is below the group average and still affected by T-7A start-up costs. Over time, we see a credible path toward ~6-8%, and potentially ~10% or above, as volumes scale, production becomes more modular, and software content grows. The sustainment business carries far more attractive economics, and we therefore assume mid-teens EBIT margins for that revenue. In our view, as Ukraine’s installed base grows and aftermarket activity builds, this higher margin revenue should lift, rather than dilute, the segment average over the coming decades.

Signing triggers upward estimate revisions

Because we treat unconfirmed political announcements with caution, we had only partly included this potential order in our base case. With the contract now signed, we will revise our Q3’26 order intake estimates upward by a large part of the order value. On the P&L, we see the largest impact taking effect during the 2027-30 production ramp. In this first take, we estimate Aeronautics revenue could rise ~7-12% in 2027-29, with EBIT following a similar but slightly more muted path at ~5-9% upside over the same period.

At group level, the effect is diluted by Aeronautics’ relative size. In the peak years, our back-of-the-envelope calculations suggest that the impact could be ~2-3% on group revenue and ~1-1.5% on group EBIT. These figures are indicative and remain subject to final delivery timing and phasing, but they show the order’s direction and scale. The signing does not change our investment case, but it strengthens our already positive view.