September 18, 2012 / 2:26 AM / 5 years ago

Modifying cancelled Northrop drone for export too costly: U.S. Air Force

WASHINGTON (Reuters) - The U.S. Air Force said on Monday it was too costly to modify for export a fleet of 18 unmanned Northrop Grumman Corp (NOC.N) Global Hawk surveillance planes that the Pentagon wants to retire under a plan that U.S. lawmakers have criticized.

The Air Force will continue using the Block 30 version of the high-altitude spy planes until Congress agrees to take them out of service, Air Force Lieutenant General Larry James, deputy chief of staff of the Air Force for intelligence, surveillance and reconnaissance, told reporters on Monday.

The Block 30 drones had not been built for export and modifying them to allow their sale to U.S. allies would be too expensive to be viable, said James, speaking at an industry conference.

South Korea, Australia, Japan and Singapore have expressed interest in the Global Hawk planes, though they may opt for a version that Northrop is building for the U.S. Navy. Northrop is also building a more advanced Block 40 version for the U.S. Air Force and NATO.

The decision to carry on flying the Block 30 drones is a partial victory for Northrop, which has been fighting their proposed retirement since it was announced in February, a plan which three of the four committees that oversee the Pentagon's budget oppose, James said. It was not immediately clear what the additional operations would cost.

The Air Force said at the time that retiring the Northrop planes and keeping its much older, manned U-2 spy planes flying would save $2.5 billion over the next five years since the manned craft are cheaper to operate.

The Obama administration has listed 66 countries as eligible to buy various U.S.-built drones under new Pentagon guidelines, but Congress and the State Department -- which have the final say -- have not yet approved the exports, a Pentagon official said this month.

Northrop Grumman Chief Executive Wes Bush earlier this month praised what he called significant moves to boost arms exports, but voiced frustration about slow progress in implementing reforms, especially in exports of unmanned planes.

Reporting By Andrea Shalal-Esa; Editing by Daniel Magnowski

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