A MAJOR deal which could help safeguard thousands of East Lancashire aerospace jobs is believed to be in the pipeline.

Speculation is mounting that BAE Systems is planning to set up a joint venture company to strengthen its relationship with the Saudi Arabian government.

Experts believe that the deal which is being discussed would help pave the way for future deals under a tie-up which has already brought hundreds of millions of pounds to BAE sites and supply firms across Lancashire.

Ownership of the new venture would be shared between BAE Systems and the Saudis.

Brian Pemberton, union convenor at BAE's Samlesbury site, said if such a joint venture strengthened the relationship between the two it was to be broadly welcomed.

"Saudi has been our most important customer for many years," said Mr Pemberton. But he cautioned that there were still major job fears surrounding BAE Systems sites in Lancashire which recently announced more than 800 cuts.

"All we seem to hear about BAE Systems is good news but there are still job losses."

Deals to sell aircraft to the Saudis -- which have been called Al Yamamah -- have brought billions of work to BAE sites during the past two decades.

Last month there was speculation that a new £3billion deal to supply Eurofighter Typhoons to the country was in the pipeline. The order could double in value once spares and support services are taken into account. The contract, codenamed Al Yamamah 3, could also involve building a new air base and the supply of about 40 BAE Hawk trainer planes.

As well as providing work at BAE Systems sites at Samlesbury and Warton, the Saudi deal would also benefit dozens of supply firms, including Rolls-Royce at Barnoldswick, Brookhouse Group of Darwen, Cleveland Guest of Colne, and Burnley firms Hurel Dubois, AIT and Pendle Aeroform.

Previous Al Yamamah deals made in the 1980s saw BAE provide 48 Tornados to the Saudis.