BERLIN (Reuters) - Germany and France said they would sign a contract with Airbus and Dassault Aviation to start work on a next-generation fighter jet in early 2019, with next steps on a joint tank program due by the end of 2018.

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French President Emmanuel Macron and German Chancellor Angela Merkel first announced plans for the two big arms program in July 2017 as part of an effort to deepen bilateral defense cooperation.

“This is a decisive step for European defense, which shows that France and Germany can unite for future projects,” the two governments said in a statement on Wednesday.

They said “significant progress” had been made on a program to develop a new fighter to replace the Eurofighter and Dassault’s Rafale beginning in 2040.

The statement said the French and German defense ministers agreed on Monday that Airbus and Dassault would co-lead a study on “a common concept and architectures (including connectivity)” for the new Future Combat Air System (FCAS), to include a jet fighter and a range of associated weapons, including drones.

Industry sources said the study would last two years, while the statement noted that additional studies and contracts for work on aircraft and engine demonstrators would be announced at the Paris Air Show in June 2019.

Airbus Defence and Space CEO Dirk Hoke, who had warned France that demanding too big of a share of the program could prevent approval by the German parliament, welcomed that the agreed study would have “clearly defined responsibilities”. No comment was immediately available from Dassault.

French electronics maker Thales is also expected to take a role in the program, along with European missile maker MBDA, German engine makers MTU Aero Engines and French enginemaker Safran, industry experts say.

Peter Harster, director of the Next Fighter Project at MTU, welcomed the commitment to build demonstrators for both the new aircraft and its engine, saying it would be crucial to test new technologies such as 3D printing and emerging materials.

Key technology challenges for the firms will be the design of an engine fulfilling the needs of a stealthy aircraft with high connectivity and excellent performance.

While France will lead the warplane project, Germany will head up development of a new battle tank, with a conceptual study to be agreed by the end of 2018. Germany’s Rheinmetall AG and Franco-German tank maker KNDS would be asked to propose further studies beginning in mid-2019.