BA Boeing Co

By Paul Vieira and Doug Cameron 

OTTAWA -- Canada plans to launch talks with Boeing Co. to buy 18 F/A-18 Super Hornet aircraft as an interim measure in a planned overhaul of the country's legacy CF-18 fighter jet fleet, the minister in charge of defense said Tuesday.

The Liberal government also will launch a competitive process to replace the aging CF-18 program, Minister Harjit Sajjan said at a news conference.

"We need to move on this as quickly as possible," said Mr. Sajjan, a retired lieutenant-colonel in the Canadian forces. "A modern fighter fleet is an essential tool for defending Canada and exercising Canadian sovereignty -- especially in the northern skies."

He added that the Liberal government, which came to power just over a year ago, inherited a fighter-jet fleet that was unable to meet its commitments to the North Atlantic Treaty Organization, or NATO, and North American defense. An interim fleet provides the most effective way to help Canada to meet its obligations, he said.

Canada's former Conservative government dropped plans almost four years ago to buy 65 Lockheed Martin Corp. F-35 fighter jets after political controversy about a lack of transparency over acquisition costs. However, the F-35 will be allowed to compete in the contest for more planes, expected to be launched early next year.

Canada's plan to start talks about an interim purchase of 18 F/A-18 Super Hornet jets is the second boost to extending the life of Boeing's combat-jet production lines after the U.S. State Department last week approved of sales to Kuwait and Qatar worth up to $31.2 billion combined. Canadian officials declined to provide an estimated cost for acquiring the Boeing aircraft.

Howard Rubel, aerospace analyst at Jefferies & Co., said the sale to Canada could be worth $1.5 billion.

"Boeing is honored to provide the Royal Canadian Air Force with the only multi-role fighter aircraft that can fulfill its immediate needs for sovereign and North American defense," the plane maker said in a statement.

Boeing faced having to shut down the St. Louis, Mo., production lines for both jets by the end of the decade unless it secured export deals. It also is trying to sell more F/A-18s to the U.S. Navy.

Kuwait wants 32 Boeing F/A-18 jets at a cost of $10.1 billion, including weapons and support systems, the Pentagon said. Kuwait signed a deal earlier this year with Leonardo SpA to buy 28 Eurofighter Typhoon jets.

Qatar wants to buy as many as 72 Boeing F-15 fighters that together with weapons and support could be worth $21.1 billion, the Pentagon said. However, Qatar still could split any purchase between Boeing and the Eurofighter Typhoon jet.

Chicago-based Boeing also is trying to sell the F/A-18 to India in a proposed deal that could require it to build the planes there.

The planned Boeing purchase is a blow to Lockheed Martin, which had originally planned to sell its F-35 jets to Canada. Lockheed said Tuesday that the plane was combat-ready and available today.

"Although disappointed with this decision, we remain confident the F-35 is the best solution to meet Canada's operational requirements at the most affordable price," a Lockheed Martin spokesman said in a statement.

Liberal Prime Minister Justin Trudeau said during his election campaign that the Lockheed Martin F-35 was unnecessary for Canada's needs and too expensive.

Canada's plan to hold a transparent bidding process for fighter jets is likely to include the F-35 as well as the Eurofighter Typhoon, the Dassault Aviation SA Rafale, and the Saab AB Gripen. The bidding process could take five years, Canadian officials said Tuesday.

Mr. Sajjan said a range of measures will be implemented to extend the service of the current CF-18 fleet, including recruitment and training to address understaffing issues and an enhanced maintenance program.

Write to Paul Vieira at paul.vieira@wsj.com and Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

November 22, 2016 18:15 ET (23:15 GMT)

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