By Tim Hepher and Sarah Young

PARIS/LONDON (Reuters) -Boeing and Sweden's Saab are in talks with Britain's BAE Systems about teaming up on a future replacement of Britain's Hawk trainer in a growing niche of the fast jet industry, three people familiar with the matter said.

Boeing and Saab have jointly developed the T-7 advanced trainer for the U.S. Air Force, while Britain has said it plans to replace the out-of-production Hawk fleet, part of which is instantly recognisable through its Red Arrows display team.

The proposals are at an early stage and details are still to be worked out, with no guarantee that an agreement can be reached, one of the sources said.

"We don’t comment on rumour and speculation," said a spokesperson for BAE Systems, whose corporate predecessor developed the successful Hawk trainer in the early 1970s.

"Training remains an important pillar of our air sector strategy. We continue to explore and develop our footprint in this area across both live and synthetic capabilities."

A spokesperson for Swedish defence firm Saab said: "We have a long-term partnership with Boeing on the co-development of T-7. Saab will not comment on rumours or speculation."

Boeing had no immediate comment.

In June, Britain's strategic defence review recommended that the Hawk be replaced after decades as Britain's premier military training aircraft, and the government said it would welcome interest from local companies.

BAE Systems told a parliamentary panel in January that it had not taken a decision on whether to develop a new aircraft to replace the Hawk, whose production line closed in 2000.

The same committee warned that the Hawk T2 version currently used for teaching pilots would not meet training requirements for future fighters being developed by Britain, Japan and Italy.

RISING DEMAND

The contest is also expected to replace the earlier Hawk T1 version flown by Britain's iconic Red Arrows aerobatic team, which is facing the retirement of its existing fleet in 2030.

"The future platform of the Royal Air Force aerobatic team is being considered at the same time, and a Royal Air Force programme team is being established to deliver that capability," defence procurement minister Maria Eagle said last month.

Answering questions in parliament, she added: "The competition will welcome any bids from UK-based suppliers".

In 2018, Boeing and Saab won a contract to provide an advanced training jet for the U.S. Air Force, though the programme has seen delays and cost overruns.



It was not immediately clear whether any potential co-operation with BAE would be kept to the UK contest or eventually seek to take advantage of BAE's incumbency in the wider export market, where over 1,000 Hawks have been sold to 18 nations.

One of the sources said it was premature to think beyond the British trainer competition.

Demand for such nimble fighter training jets is rising.

According to U.S.-based consultancy AeroDynamic Advisory, the market for military trainer aircraft is expected to rise to $3.7 billion in 2030 from $2.8 billion, excluding substantial related spending on support, sustainment and training services.

Managing Director Richard Aboulafia said that is in part because of expanding forces across the globe, but also because one of the most widely sold recent fighters, the Lockheed Martin F-35, unusually does not have its own two-seater training version.

Currently, key suppliers include the Boeing-Saab T-7, Leonardo's Aermacchi M-346 and the Korea Aerospace Industries T-50 Golden Eagle.

They have been joined by Aeralis, a privately owned early-stage British company which has designed a jet trainer aircraft using a modular approach and says it could replace the Hawk.

UK specialist publication Defence Eye reported last week that Britain is looking at buying a first batch of new trainers over the next five years to replace the Red Arrows' T1s, followed by a larger second batch of T2 replacements in the late 2030s.

"A major complicating factor is the need for the Red Arrows aircraft to be British-designed, or at least British-assembled, to allow the aircraft to act as a promotional tool for the UK aerospace industry," the report said.

(Reporting by Tim Hepher and Sarah Young, Additional reporting by Mike Stone; Editing by Susan Fenton and Jan Harvey)