UPDATE 2-U.S. plans Lockheed F-16 sale to Morocco

(Recasts, adds details on Lockheed production line)

By Jim Wolf

WASHINGTON, Dec 19 (Reuters) - The Bush administration announced plans Wednesday to sell Morocco 24 Lockheed Martin Corp (LMT.N) F-16C/D fighter aircraft with advanced arms and related gear valued at up to $2.4 billion.

The sale would be a blow to France's Dassault Aviation (AVMD.PA), which had hoped Morocco, a former French colony, would buy its Rafale fighter instead.

The Pentagon said it is planning to supply the Block 50/52 model, the most modern F-16 flown by the U.S. Air Force. Only the United Arab Emirates flies a more advanced F-16, the so-called Block 60.

Satellite-navigation systems, electronic warfare equipment, and helmet-mounted cueing, which displays targeting information on the visor of the pilot's helmet, would be included.

"The proposed sale will contribute to the foreign policy and national security objectives of the United States by enhancing Morocco's capability to support U.S. efforts in the global war on terrorism," the Pentagon's Defense Security Cooperation agency said in a notice to lawmakers.

The deal also would support Morocco's "legitimate need for its own self-defense," said the notice, dated Tuesday and made public Wednesday.

It said the sale would greatly enhance Morocco's "interoperability" with the United States and other NATO nations, "making it a more valuable partner in an increasingly important area of the world."

Morocco would become the 25th country to fly the F-16, according to Lockheed Martin, the Pentagon's No. 1 supplier by sales.

The deal would be worth $2.4 billion if all options are exercised, the Pentagon said.

With its Rafale, France had targeted the high end of the market, according to Richard Aboulafia, a fighter-market expert at the Fairfax, Virginia-based Teal Group aerospace consultant.

"After 15 years of lost sales campaigns, France's only remaining hope appears to be Libya," he said. Libya is negotiating to buy 14 Rafales, Dassault's chief executive, Charles Edelstenne, said last week in Paris.

The Pentagon said the F-16s, the most widely sold fighter on the international market, would not affect the basic military balance in the region.

The F-16 may be equipped with engines built by either United Technologies Corp's (UTX.N) Pratt & Whitney unit or General Electric Co (GE.N).

The notice of a proposed arms sale is required by U.S. law. It does not mean a deal has been concluded. Congress has 30 days to block a sale, but rarely does so.

Without counting Morocco, Lockheed Martin said 4,496 F-16s had been ordered to date. The company has a backlog of 116 F-16 orders, pushing production to the end of 2011, said Joe Stout, a Lockheed spokesman. (Reporting by Jim Wolf; Editing by Derek Caney and Maureen Bavdek)