Canadian election results seen as bad news for Lockheed's F-35

By Andrea Shalal
WASHINGTON, Oct 20 (Reuters) - The election of Canada's
Liberal leader Justin Trudeau as prime minister spells bad news
for Lockheed Martin (N:LMT) Corp's LMT.N F-35 advanced fighter jet
program because last month Trudeau said he would not buy the
plane if elected, U.S. industry and government sources said on
Tuesday.
Trudeau's election perhaps offers hope to Boeing (N:BA) Co BA.N ,
whose F/A-18E/F fighter jets are nearing the end of production
and the company could be considered as a supplier of a new
fighter jet.
Industry executives and government officials said there
would be difficulty ahead for the F-35 program.
"Trudeau hasn't left himself any outs. His statements were
very categorical," said one source, who is familiar with the
situation but was not authorized to speak publicly.
Trudeau opposes the F-35 purchases and said money saved by
switching to another plane could help fund needed Navy projects.
Last month he said that, if elected, his party would launch an
open and transparent competition to replace Canada's aging CF-18
fighter jets with more affordable aircraft. urn:newsml:reuters.com:*:nL1N11Q0Q0
For now, Canada remains one of the nine partner countries
that funded development of the F-35 fighter jet. Canada pledged
to invest $150 million in the program's development when it
signed up in February 2002.
Those funds will not be reimbursed if Canada exits the
program, and many Canadian companies that now supply parts to
Lockheed could see those orders disappear, said one source
familiar with the program.
The Pentagon's F-35 program and Boeing had no immediate
comment.
Lockheed said only that it had not been notified by the
Canadian government of any change in its status as a partner in
the F-35 program.
"They are a valued partner and we will continue to support
them through their decision process to replace their ageing
CF-18 fleet," said Lockheed spokeswoman Alison Orne.
The loss of 65 F-35 orders would cut Lockheed's future
revenues by well over $6 billion, and would also affect engine
maker Pratt & Whitney, a unit of United Technologies Corp (N:UTX)
UTX.N , and other suppliers such as Northrop Grumman Corp (N:NOC)
NOC.N and Britain's BAE Systems Plc BAES.L .
Canada's ruling Conservatives announced plans in 2010 to buy
65 F-35 jets, but scrapped those plans in 2012 after a probe
found officials had played down the costs and risks of the deal.
A subsequent review found that Lockheed's F-35 scored well
on various tests, but Boeing Co's BA.N F/A-18E/F Super Hornet
was almost as capable and cheaper. urn:newsml:reuters.com:*:nL1N0R5350