Australia to Buy 58 F-35 Joint Strike Fighters

By Ross Kelly 

SYDNEY-Australia said it would buy 58 Lockheed Martin Corp. F-35 Joint Strike Fighters in a deal worth about US$12 billion, making it one of the biggest international customers for the jet.

Australia, a close American ally, had planned to buy up to 100 F-35s to replace its aging fleet of F/A-18 Hornet fighters. The latest purchase will take its F-35 fleet to 72, with the option of acquiring an additional squadron in future, Prime Minister Tony Abbott said Wednesday.

The decision comes as other countries have also scaled back orders for the aircraft because of domestic budget constraints. International orders are crucial for the financial success of the stealth fighter, which has suffered myriad technical glitches and cost overruns and currently sells for over US$100 million.

South Korea last month set a budget of about US$6.8 billion for the 40 Lockheed fighters it aims to buy this year. The country had planned to buy 60 jets and cut the number due to budgetary reasons, though it has said it might buy more planes later.

Australia's small air force is one of the most technically advanced in the Asian-Pacific region. But a slowing economy as a long mining boom fades has put the new conservative government under pressure to rein in its budget even as Asian neighbors ramp up military spending. The country's defense minister said in February that Canberra would review plans to double its fleet of submarines, despite a buildup in naval and air arsenals by regional neighbors-led by China-amid disputes over territorial waters in North Asia.

"We are certainly retaining the option to purchase an additional squadron-a further 18 joint strike fighters," Mr. Abbott told reporters Wednesday.

The Australian government in December forecast budget deficits totaling 123 billion Australian dollars (US$114 billion) over the next four fiscal years to June 2017, and said it would cut billions from spending.

The total F-35 purchase cost of A$12.4 billion includes associated facilities, weapons and training. Mr. Abbott said he expected to pay around A$90 million per jet. "We're confident as time goes on the cost per aircraft will reduce," he said.

Lockheed has committed to cutting the cost of its F-35s to between $80 million and $85 million by the end of the decade as it spars with rival producers such as Boeing Co. for lucrative defense contracts in other countries such as Denmark and Canada.

The U.S. company is relying more heavily on international sales as it faces a flat domestic defense budget at home. Key offshore buyers such as Italy, however, have indicated they may trim the size of their orders as they try to keep fragile economic recoveries on track.

Australia's purchase of F-35s, due to start becoming operational from 2020, comes as the U.S. expands its military presence in the Asian-Pacific region to counter China's growing influence. Canberra agreed two years ago to allow U.S. marines to rotate thousands of troops and their aircraft through U.S. bases in the country's north.

"The world remains a difficult and often a dangerous place and sensible countries need to have military forces capable of dealing with foreseeable contingencies," Mr. Abbott said.

Write to Ross Kelly at [e-mail]

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