Pentagon pleased with V-22 Osprey's performance

* Bell-Boeing interested in presidential helicopter contest

* Pentagon working to improve readiness

WASHINGTON, May 4 (Reuters) - The U.S. military is pleased with the performance of the V-22 tilt-rotor aircraft in Iraq and Afghanistan, but is still working hard to improve its readiness, the Pentagon’s program manager said on Tuesday.

Marine Corp Colonel Greg Masiello told reporters that the V-22 or Osprey built by Boeing Co BA.N and Textron Inc's TXT.N Bell Helicopter unit, had not missed a single operational mission since its first deployment.

He said the Pentagon still wanted to improve the current readiness level of the aircraft, which takes off and lands like a helicopter, but flies like a plane. The aircraft had a readiness level of 68 percent in Iraq, but the goal was to increase that around 80-plus percent by 2018, he said.

The V-22 program was nearly cancelled after several deadly accidents during its development, but officials say it is now winning kudos for the unusual capabilities it offers.

However, the Air Force is still investigating the crash of an Air Force V-22 in Afghanistan in April that killed four people, an incident some reports have blamed on a brownout effect caused when its rotors kicked up fine sand.

Masiello declined comment on the cause of the accident since the investigation is still underway. But he said that neither the Marine Corps nor Air Force grounded their other aircraft after the accident.

Masiello said the Pentagon was beginning to put together a business case for a second five-year multiyear procurement of the aircraft that would begin in fiscal year 2013.

“That should send a message on how confident we are on this platform,” he said.

Gene Cunningham, vice president of the Bell Boeing joint venture that builds the aircraft, said production was going well and would reach 35 a year next, growing to 40 by 2014.

Masiello said 106 aircraft had been delivered, and two more were en route, and the government was working closely with the contractors to lower costs on the plane.

Cunningham said the companies expected foreign interest in the aircraft to pick up now that it was being used for military work, and said there could also be interest from other U.S. agencies, civilian and military.

He said Bell Boeing was clearly looking to sell more of the planes, and would respond to a request for information issued by the Navy for a new presidential helicopter competition.

Masiello said the aircraft could land at the White House, despite the fact that it is larger than the other helicopters in the competition.

Reporting by Andrea Shalal-Esa; Editing by Bernard Orr