By Simon Johnson and Johan Ahlander
UPPSALA, Sweden, May 28 (Reuters) - Ukrainian President Volodymyr Zelenskiy said on Thursday he was working with Sweden on a major defence package, including a "strong step" on Gripen fighter jets, as Sweden's Prime Minister Ulf Kristersson welcomed him to Sweden.
Kristersson and Zelenskiy signed a letter of intent last year under which Sweden could sell up to 150 of its Saab Gripen model E fighter jets to Ukraine. But with deliveries several years away, there have
also been discussions about transfers of existing, C/D model Swedish Gripens.
"We are preparing a major defence package for Ukraine and a strong step regarding Gripen fighter jets, which will definitely make our combat aviation more effective," Zelenskiy said on X just after Kristersson welcomed him at Uppsala air base where two Gripen jets flew low over the tarmac.
The two leaders were due to hold a press conference at 1100 GMT.
Shares in Saab rose following the news and were up 5% at 0834 GMT.
Sweden is one of the largest contributors to Ukraine and has sent 128 billion Swedish crowns ($13.75 billion) worth of military and civilian aid so far. It has also set aside 80 billion crowns in aid for this year and next.
An agreement to hand over older Gripens could help pave the way for a far larger order for the latest model of the fighter. Industry experts say it would also allow the jet to prove itself in combat in a far more significant way than it has to date, a strong selling point in any future deals with other buyers.
A deal is also a way for Sweden to leverage its large defence industry, which has seen a surge in demand since Russia's invasion of Ukraine.
With any potential deliveries of the Gripen E several years away, the transfer of existing C/D jets would be a stop-gap solution for Ukraine's air defence in the meantime.
The planes are a priority for Ukraine's fighter fleet and the country's defence minister said in May that a deal for Gripen E could be signed "within months" after the European Union approved a 90 billion euro loan for Ukraine.
Swedish defence group Saab's CEO told Swedish media in May that he hoped an agreement, which would be Sweden's biggest ever arms export deal, would be signed this year.
($1 = 9.3114 Swedish crowns)
(Reporting by Simon Johnson, Johan Ahlander, Louise Rasmussen and Essi Lehto; Editing by Niklas Pollard, Emelia Sithole-Matarise and Chiara Rodriquez)
