By Ross Kelly
SYDNEY-Australia said it would buy 58 Lockheed Martin Corp. F-35
Joint Strike Fighters in a deal worth about US$12 billion, making
it one of the biggest international customers for the jet.
Australia, a close American ally, had planned to buy up to 100
F-35s to replace its aging fleet of F/A-18 Hornet fighters. The
latest purchase will take its F-35 fleet to 72, with the option of
acquiring an additional squadron in future, Prime Minister Tony
Abbott said Wednesday.
The decision comes as other countries have also scaled back
orders for the aircraft because of domestic budget constraints.
International orders are crucial for the financial success of the
stealth fighter, which has suffered myriad technical glitches and
cost overruns and currently sells for over US$100 million.
South Korea last month set a budget of about US$6.8 billion for
the 40 Lockheed fighters it aims to buy this year. The country had
planned to buy 60 jets and cut the number due to budgetary reasons,
though it has said it might buy more planes later.
Australia's small air force is one of the most technically
advanced in the Asian-Pacific region. But a slowing economy as a
long mining boom fades has put the new conservative government
under pressure to rein in its budget even as Asian neighbors ramp
up military spending. The country's defense minister said in
February that Canberra would review plans to double its fleet of
submarines, despite a buildup in naval and air arsenals by regional
neighbors-led by China-amid disputes over territorial waters in
North Asia.
"We are certainly retaining the option to purchase an additional
squadron-a further 18 joint strike fighters," Mr. Abbott told
reporters Wednesday.
The Australian government in December forecast budget deficits
totaling 123 billion Australian dollars (US$114 billion) over the
next four fiscal years to June 2017, and said it would cut billions
from spending.
The total F-35 purchase cost of A$12.4 billion includes
associated facilities, weapons and training. Mr. Abbott said he
expected to pay around A$90 million per jet. "We're confident as
time goes on the cost per aircraft will reduce," he said.
Lockheed has committed to cutting the cost of its F-35s to
between $80 million and $85 million by the end of the decade as it
spars with rival producers such as Boeing Co. for lucrative defense
contracts in other countries such as Denmark and Canada.
The U.S. company is relying more heavily on international sales
as it faces a flat domestic defense budget at home. Key offshore
buyers such as Italy, however, have indicated they may trim the
size of their orders as they try to keep fragile economic
recoveries on track.
Australia's purchase of F-35s, due to start becoming operational
from 2020, comes as the U.S. expands its military presence in the
Asian-Pacific region to counter China's growing influence. Canberra
agreed two years ago to allow U.S. marines to rotate thousands of
troops and their aircraft through U.S. bases in the country's
north.
"The world remains a difficult and often a dangerous place and
sensible countries need to have military forces capable of dealing
with foreseeable contingencies," Mr. Abbott said.
Write to Ross Kelly at ross.kelly@wsj.com
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