PARIS/BERLIN (Reuters) - France and Germany have reached an agreement on the next steps in a joint program to design a next-generation combat jet, French Defence Minister Florence Parly said on Tuesday.

FILE PHOTO: French Defence Minister Florence Parly visits Euronaval, the world naval defence exhibition in Le Bourget near Paris, France, October 23, 2018. REUTERS/Benoit Tessier/File Photo

The jet, due to go into service in 2040, is expected to replace the Rafale, built by France’s Dassault Aviation, and Germany’s Eurofighters, made by a European consortium.

Parly said on Twitter that the agreement included the planned launch of a prototype or demonstrator of both the aircraft and the engine by the middle of next year.

“Decisive step today with the agreement to start the architecture and design studies and the launch of demonstrators (aircraft and engine) by mid-2019,” Parly tweeted. “It is advancing.”

Germany and France signed a memorandum of understanding in April and agreed that France would take the lead. The two governments have been at odds about future exports, while the companies involved are fighting over leadership of the system to integrate the jet with drones and other weapons.

Dassault and Airbus will shortly submit an unsolicited proposal for initial conceptual work on the new fighter jet to German and French officials, sources familiar with the matter told Reuters last week.

The two companies agreed in principle in April to work together on the program, but say they need early funding so they can start work on new technologies required.

France’s Safran and Germany’s MTU Aero Engines are expected to join forces to develop the engine. French electronics firm Thales and European missile maker MBDA are also seeking a stake.

Safran is expected to take the lead in the development of the engines with MTU as the subcontractor, French business newspaper La Tribune reported on its website on Tuesday.

A French military official told the International Fighter conference in Berlin last week that the two governments hoped to conclude an initial contract in January.

Bruno Fichefeux, head of future combat air systems at Airbus, told the conference he expected conceptual work on the program to begin soon, “bilaterally or with Spain.”

Germany, France and Spain have completed separate studies on the next generation fighter.

La Tribune said Spain, which had been in discussions with a rival project launched by Britain in July, will join the Franco-German program once it is stabilized and will sign a letter on intent to do so in the first quarter of next year.

The German defense minister had no immediate comment.