War budget allows U.S. to retire old C-5 planes
* Little noticed provision in war spending budget
* Air Force pressed for retirement rights for years
WASHINGTON, June 30 (Reuters) - A $106 billion war spending law signed by President Barack Obama last week allows the Air Force to retire its oldest Lockheed Martin Corp (LMT.N) C-5 transport planes, which suffer chronic readiness problems.
The little-noticed provision of the law repeals a 2004 ban on retirement of the huge military transport planes, something the Air Force has been seeking for years given the high cost of maintaining the planes and their poor readiness levels.
The provision gives the Air Force permission to retire C-5A aircraft within 15 days after certifying to lawmakers that such a move "will not significantly increase operational risk" and will not take the inventory of strategic airlifters below the level of 292 identified in a 2005 Pentagon study.
The Air Force had no immediate comment on the congressional move, or whether it planned to retire any C-5As.
Boeing supporters in Congress have argued for years that the Pentagon should retire the oldest C-5s and buy more of Boeing Co's (BA.N) newer C-17 transport planes, which can land at more airfields, and have higher readiness levels.
But other lawmakers have fought against the C-5 retirements for years, because of the number of well-paying jobs involved in maintaining the aircraft.
Defense Secretary Robert Gates told Congress in April that the Air Force had 59 C-5As and was starting to build up excess transport capacity, given lawmakers' addition of extra C-17s to the budget in recent years.
The Air Force has about 50 newer C-5 "B" and "C" models.
The Air Force currently has 205 C-17s delivered or on order, and lawmakers added eight more to a fiscal 2009 war spending law signed by Obama last week.
At the time, Gates called it a "zero-sum game," noting that even if the Air Force was allowed to retire some C-5s, it would have to give up other programs to buy more C-17s.
Analyst said decisions on any retirements of C-5 or additional C-17 purchases would come after the Air Force completes a study of its mobility needs later this summer.
Defense analyst Loren Thompson with the Virginia-based Lexington Institute said the repeal of the retirement ban on C-5s would not necessarily translate into additional orders of C-17 planes, given the congressional politics involved.
But one congressional aide, who asked not to be identified given the sensitivity of the issue, said allowing the retirement of the C-5s would at least remove Gates' counter argument about excess capacity.
Lockheed is under contract with the Air Force to modernize the C-5A aircraft, and put new engines on later models.
Lockheed spokesman Jeffery Adams said the congressional language would have no impact on the re-engining program, which covers 52 C-5 "B" and "C" models. He said three C-5s had already received new engines and been delivered to the Air Force. (Reporting by Andrea Shalal-Esa, editing by Leslie Gevirtz)
