The United Arab Emirates has pulled out of talks with the UK government to purchase Typhoon Eurofighters, British defence company BAE Systems announced on Thursday.
"BAE Systems and the UK government have been in discussions with the government of the United Arab Emirates regarding a range of defence and security capabilities including the potential supply of Typhoon aircraft," a statement said.
"The UAE have advised that they have elected not to proceed with these proposals at this time."
The development could see the UAE now turn to Rafale fighter planes, made by French aerospace group Dassault Aviation, to replace its ageing French Mirages.
It could also turn to Lockheed Martin, the US group producing next-generation F-35 jet fighters. But Sandy Morris, analyst at Jefferies financial group, told AFP that this was very unlikely after Israel had already agreed to buy F-35s.
"No competing aircraft suddenly moves up in to pole position," he said.
"As for the F-35, I lean towards the politics and sensitivities surrounding Israel as representing a mountain to climb."
BAE meanwhile said it "stands ready to work with the UAE to address any future requirements".
The British group added that it had yet to reach agreement on pricing of Typhoon jets it hopes to sell to Saudi Arabia.
"Whilst good progress has been made, a definitive agreement has yet to be reached," it added in Thursday's statement.
The United Arab Emirates had shown an interest in ordering up to 60 Typhoon Eurofighters, which BAE builds in co-operation with European aerospace giant EADS and Italy's Finmeccanica.
BAE and Saudi Arabia signed a £4.5-billion deal in 2007 to supply 72 Eurofighter Typhoon jets to Riyadh. But the contract has faced obstacles over the cost.
BAE, hit by government cutbacks to military spending, is looking to push on after the collapse of last year's planned mega-merger with EADS.