Aircraft manufacturer BAE Systems says the United Arab Emirates has pulled out of a deal to buy Eurofighter aircraft.
The Gulf state had been in talks with the company and the UK government to buy 60 Typhoon jets.
The union convenor at the firm's Warton factory in Lancashire said it was "very disappointing news to get before Christmas".
But a government spokesman said it was a "commercial decision" and that it was "always going to be a difficult deal".
"As BAE have said, it was an exciting prospect but not part of their business plan," they added.
In a statement BAE Systems said: "The UAE have advised that they have elected not to proceed with these proposals at this time."
A spokesman added that the collapse of the deal would not have an impact on jobs at the firm's Warton factory.
Phil Entwhistle, from the factory's Unite union branch, said the deal would have been a "game changer" in terms of recruitment and the long term future of the factory.
"Having said that, there's no threat to jobs in the short or medium term," he added.
"This deal wasn't yet part of the company's business plan so we won't be seeing people losing their jobs, certainly for the next three years or so."
Last year, BAE systems lost out on a deal to supply 126 Typhoon jets to India.