Australia to back F-35 buy in new defence blueprint

Thu May 2, 2013 1:45am EDT

* Autralia keeps plan to buy 100 F-35s

* Canberra also to buy Asia-first Growlers in new defense strategy

* Canberra reassesses military in light of U.S. pivot

By Andrea Shalal-Esa and Rob Taylor

WASHINGTON/CANBERRA, May 2 (Reuters) - Australia's government is expected to affirm plans to buy up to 100 Lockheed Martin Corp F-35 fighter jets, according to a defense blueprint to be released on Friday, easing concerns hanging over the future of the controversial stealth fighter.

The Australian plan, as outlined by defense sources and analysts, will also call for the purchase of a dozen Boeing Co EA-18G electronic attack planes, modified versions of Boeing's Super Hornets, purchased as a stopgap for the F-35.

It reinforces positive steps for the F-35, coming on the heels of a decision by Norway to buy six F-35s a year earlier than planned, and the Dutch parliament's decision not to reassess F-35 rivals to replace aging F-16s.

The program has been plagued by cost overruns and delays.

"Australia, Norway, the Netherlands -- it's all good news for the F-35 program," said a U.S. defense official, although he added that U.S. budget cuts could still pare down Washington's order of 29 jets in fiscal 2013, which ends on Sept. 30.

U.S. Air Force Lieutenant General Christopher Bogdan warned Congress again last week that the $396 billion F-35 program, the most expensive ever U.S. arms program, remained at risk of a "death spiral" in which cuts in orders drive up the cost per plane, leading to more cuts.

But Singapore and South Korea, Bogdan said, were looking at placing orders for the stealth-cloaked Lockheed fighter in the northern summer.

Singapore is likely to order 12 jets, with an option for eight more, according to sources familiar with the plans. Sixty jets are at stake in South Korea's competition, which has pitted the F-35 against Boeing's F-15 Silent Eagle and the Eurofighter Typhoon built by EADS, BAE Systems Plc and Finmeccanica SpA.

"There's clearly better momentum on the program than there was six months ago," said Byron Callan, analyst with Capital Alpha Partners. "The jury is still very much out on whether the program will ultimately achieve the type of numbers that Lockheed and the DOD (Department of Defense) have discussed."

ORDERS BEING CUT

The United States and its allies plan to buy more than 3,100 of the jets in coming decades, although the numbers may change as some countries pare back orders and others join the program.

The Netherlands may cut 17 to 33 F-35s from its planned order of 85, although sources said the final number may not be announced for some time.

Defense officials say most of the technical challenges facing the new warplane have been addressed, flight testing is advancing, and rising foreign orders will drive up production rates despite U.S. decisions to postpone orders in recent years.

Additional budget cuts may knock five to seven F-35s out of the fiscal 2013 U.S. Air Force, Marine Corps and Navy budgets. Those decisions will not be finalized until late May, but officials at all three U.S. services say they recognize that any reduction will increase the cost of each of the remaining aircraft to be built this year by several million dollars.

Jim McAleese, a Virginia-based defense consultant, said the Air Force, which faced the loss of three to five jets from its fiscal 2013 budget, was looking at shifting funds out of other lower-priority acquisition programs to minimize the impact on the F-35 program and a new Boeing aerial refueling tanker.

The target of up to 100 F-35s in the Australian blueprint is likely be couched as "aspirational", subject to economic conditions, defense sources and analysts said.

AUSTRALIAN F/A-18S

The paper is expected to scale back a $275 billion weapons buying plan released in 2009, but proceed with the purchase of a dozen new Boeing EA-18G "Growlers," advanced electronic attack planes, a capability first for a U.S. ally in Asia.

Canberra's future frontline air fleet would have up to 100 F-35s and 36 Super Hornets, counting the radar-jamming Growlers, and make Australia's air force one of the region's most potent.

Australia had planned to retrofit a dozen Super Hornets with the electronic attack capabilities, but has now decided to buy new Growlers, said two sources who were not authorized to speak on the record.

The Boeing buy, reduced to 12 from 24 planes, had threatened to scale back Canberra's F-35 purchase. Boeing is expected to continue pushing the Super Hornet as a more affordable alternative, particularly if any new F-35 crises emerge.

"Just wait until the slightest hiccup with the F-35, and the Boeing people will be there making their argument," one source said.

U.S. Navy Captain Frank Morley last month said Australia would decide by late spring or early summer whether to buy 12 or 24 of the Boeing planes. Even a 12-plane buy would extend the Boeing production line well into 2016, he said.

Australia decided to stick with the F-35, heartened by recent progress on the plane and its high-tech helmet that fuses all the sensor data from the plane, said three sources familiar with the plan.

Australia's first two F-35s are due to be delivered in 2014-15. It has so far only committed to buying 14 F-35s.

Australia's defence paper is also expected to commit to building a fourth advanced air warfare destroyer, part-built by BAE Systems and Spain's Navantia, as well as advancing with plans for 12 advanced conventional attack submarines with range to reach the South China Sea, defense sources said.

The paper is the first reassessment of Australia's military priorities since the U.S. pivot to the Asia-Pacific, which included U.S. Marine rotations through northern Australia.

Under the blueprint, Australia is also expected to buy a fleet of Northrop Grumman RQ-4 maritime surveillance drones to help guard offshore resource assets at a cost of up to $3 billion, as well as new naval re-supply ships.

Foreign Minister Bob Carr said on Thursday that Asian neigbours were already being briefed on the new defence paper to allay strategic concerns about Canberra's buildup of naval and air forces, which includes two large amphibious assault ships.

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