UPDATE 1-Canada election results seen as bad news for Lockheed's F-35

Tue Oct 20, 2015 3:51pm EDT
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(Adds F-35, Boeing comments, further background)

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 Corp's F-35 fighter jet program given Trudeau's staunch opposition to any F-35 purchases, U.S. industry and government sources said on Tuesday.

Trudeau's election offers hope to Boeing Co, whose F/A-18E/F fighter jets are nearing the end of production and could be considered to replace Canada's current aging CF-18 fighter jets.

Industry executives and government officials said there would be difficulty ahead for the F-35 program.

Trudeau last month said that, if elected, his party would launch an open and transparent competition to replace Canada's older aging CF-18 jets with more affordable aircraft. He said his government would not buy any F-35 jets.

Pentagon data show the last batch of F-35 A-model jets cost $108 million each, although that price is slated to drop to $85 million by 2018. Boeing's F/A-18E/F currently costs $60 million per aircraft, according to the U.S. Navy.

For now, Canada remains one of the nine countries in the initial F-35 partnership. It 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. Many Canadian firms that supply parts worth hundreds of millions of dollars to Lockheed each year could also lose those orders, according to two sources familiar with the program but not authorized to speak publicly.   Continued...