Danish Defense Ministry Recommends Lockheed Martin Fighter Plane Deal -- 2nd Update
May 12 2016 - 06:58AM
Dow Jones News
By Robert Wall and Charles Duxbury
The Danish Defense Ministry on Thursday recommended the purchase
of 27 Lockheed Martin Corp. F-35 Joint Strike Fighter combat planes
to modernize the country's air force.
The stealthy F-35 jet fighters would replace the Danish air
force's aging F-16 jets, which have recently been used in the
Middle East as part of the coalition striking Islamic State
targets.
The full government still has to sign-off on the deal it valued
at around 20 billion Danish kroner ($3 billion). Danish Prime
Minister Lars Løkke Rasmussen said the new planes would allow the
country to "monitor our airspace and repel violations at home and
we can work to stop wars and conflicts abroad spreading and
affecting us."
Denmark said it planned to take delivery of the planes between
2021 and 2026. The jets should be ready to participate in
international operations in a basic role from 2025 and be fully
war-ready two years later.
The U.S. government has been eager to add international buyers
to the F-35 program to help reduce unit costs and offset
lower-than-planned purchases by the Pentagon. The U.S. and overseas
buyers are combining to buy about 3,000 of the planes.
Denmark would become the second Nordic country to buy the jet
after Norway. Finland also has kicked off a program to buy a new
fighter, where the F-35 is expected to compete.
Denmark first joined the F-35 program in 2002 and made a $125
million investment to be involved in the plane's development phase.
Until today it hadn't committed to buying any of the planes. They
cost about $100 million each to buy and far more to operate and
maintain over the decades they are expected to be in service.
The trillion-dollar F-35 program has suffered years of delays
and technical setbacks. It entered service with the U.S. Marine
Corps, the first to operate the jet, last year, with the U.S. Air
Force planning to declare the plane operationally ready by the
year-end. Other buyers include the U.K., the Netherlands, Turkey,
Italy, Australia and Israel.
Denmark's selection is a setback for losing bidders Boeing Co.,
the world's largest commercial plane maker, which offered its
F/A-18E/F Super Hornet combat plane also flown by the U.S. Navy and
Australia, and AirbusGroup SE, which led the effort to sell Denmark
the Eurofighter Typhoon combat jet.
The team evaluating the three planes rates the F-35 highest in
all categories covering everything from military performance to
industrial aspects.
Boeing faces dwindling opportunities to extend the production
line of its F/A-18E/F Super Hornet. Leanne Caret, chief executive
of Boeing's defense unit on Wednesday told investors the company
would be able to sustain production of fighter aircraft, which also
includes the F-15 combat jet, beyond 2020. The U.S. Navy may buy
additional jets and Boeing also is trying to interest Middle East
countries and Finland in its combat planes.
The Eurofighter Typhoon team--which also involves BAE Systems
PLC, Europe's largest arms maker, and Italy's Leonardo--
Finmeccanica SpA--has suffered a series of losses in international
fighter competitions. Kuwait, however, recently gave the program a
boost when it signed a contract to buy 28 of the planes in a deal
valued at more than EUR8 billion ($9.13 billion).
Swedish defense company Saab AB had earlier opted not to submit
a bid for its Gripen fighter, viewing the Danish competition as
stacked against it.
Lockheed Martin, the world's largest arms maker by sales, has
signed agreements with Danish industry, including arms maker Terma
A/S to make parts for the plane. "Throughout the competition we
have had a constructive dialogue with all three contestants. We
look very much forward to engage in a deeper collaboration with
Lockheed Martin," Terma CEO Jens Maaløe said. The union of Danish
metal workers also welcomed the choice.
Denmark will buy the F-35A version being introduced by most air
forces. Lockheed Martin also builds a jump-jet model, in-service
with the U.S. Marines, and a version for aircraft carrier
operations.
Write to Robert Wall at robert.wall@wsj.com and Charles Duxbury
at charles.duxbury@wsj.com
(END) Dow Jones Newswires
May 12, 2016 06:43 ET (10:43 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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