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Grounding, budget woes cloud F-35 warplane sales push in Australia

Third Marine Aircraft Wing's first F-35B arrives on the Marine Corps Air Station Yuma flightline, in Yuma, Arizona, in this U.S. Marine Corp
Third Marine Aircraft Wing's first F-35B arrives on the Marine Corps Air Station Yuma flightline, in Yuma, Arizona, in this U.S. Marine Corp

By Andrea Shalal-Esa and Jane Wardell

WASHINGTON/MELBOURNE (Reuters) - This year's second grounding of Lockheed Martin Corp's F-35 warplane, plus looming U.S. defense cuts, will complicate a push this week by Lockheed and U.S. officials to convince Australian lawmakers and generals to stick to a plan to buy 100 of the jets.

Australia, a close American ally, is considering doubling its fleet of 24 Boeing Co F/A-18 Super Hornets amid delays and setbacks in Lockheed's $396 billion F-35 project.

That means Canberra could buy far fewer F-35s than initially planned, at a time when Canada is also rethinking its plans to make the F-35 - also known as the Joint Strike Fighter (JSF) - its future frontline warplane.

U.S. Lieutenant General Christopher Bogdan, the Pentagon program chief for the F-35, said the grounding over a crack found in a test aircraft engine would not delay delivery of the most expensive combat aircraft in history.

"It is not unusual in development programs for these things to happen," Bogdan told reporters at an airshow in the Australian city of Melbourne, where the futuristic jet will draw attention from potential customers in Asia.

"Don't be shocked in the future if we find other things wrong with the airplane that will result in us doing the same thing."

All flights by the 51 F-35 fighter planes were suspended on Friday after a routine inspection revealed a crack on a turbine blade in the jet engine of a test aircraft in California.

SUPER HORNETS COULD TAKE F-35 ORDERS

Australia will decide at the end of this year on the timing of an order for an initial 12 F-35s while it considers options to replace 71 early model F/A-18 fighter jets and a recently retired fleet of 24 Vietnam-era F-111 supersonic bombers.

Many defense insiders expect plans for a fleet of F-35s to be revised to feature 48 Super Hornets - 12 equipped as EA-18G Growlers with radar-jamming electronic weapons - and as few as 50 Joint Strike Fighters.

A source familiar with the matter said Canberra's decision on the Super Hornets could come within the next three to six weeks.

"The Super Hornets will eat into F-35 orders," said Sam Roggeveen, a former Australian government intelligence and arms analyst, now with the Lowy Institute security think tank.

"It's not too crude to say it will be a one for one replacement, because so far that's the kind of basis that defense has so far been working on anyway."

Budget cuts have already forced Italy to scale back its F-35 orders, and Turkey has delayed its purchases by two years. Orders from Japan and Israel have buoyed the project, and additional Israeli orders are expected in 2013.

Singapore has also taken a more active interest in the radar-evading jet, and South Korea is expected to announce a winner in its fighter contest late this year.

Australia and other countries are watching orders and problems with the jet with concern, since every reduction drives up the price of the remaining fighters to be built.

"It is a nuisance," said a spokesman for the Dutch defense ministry, which has already paid for two test planes but will determine the size of its total F-35 order later this year.

Australian officials know the stakes are high.

"We're only a small player, but other countries are watching," said a source at Australia's Defense Materiel Organisation, part of the defense department, who was not authorized to speak publicly.

Bogdan approved the grounding just before leaving Washington to join Lockheed executives at the Avalon air show in Melbourne.

"I believe by the end of this week we would know what the root cause of that crack was. If it's as simple as a foreign object damage problem, or a manufacturing quality problem, I could foresee the airplanes being back in the air in the next week or two," he said.

Lockheed executives have been trying to reassure Canberra. They insist that problems with software and design, including imaging and night vision functions of the pilot's helmet, are being resolved, and testing is ahead of schedule.

U.S. BUDGET CUTS ANOTHER WORRY

One U.S. defense official, who was not authorized to speak publicly, said the technical problems bedevilling the new fighter were less troubling than Washington's budget woes.

Sweeping budget cuts due to take effect in the United States on March 1 could cut funding for the Pentagon's biggest weapons program and delay work on seven jets this year alone.

"What the foreign partners worry about is the stability of the program writ large," said the official. "We're solving the technical challenges. There are no showstoppers there, although they're not cheap."

U.S. military budgets are slated to be cut by nearly $500 billion over the next decade, an amount which could double unless Congress acts in the next week to avert spending reductions known as "sequestration".

After the latest F-35 grounding, a former Australian defense minister in the Labor government, Joel Fitzgibbon, criticized the country's military commanders for their "obsession" with the troubled F-35.

"I think there is an almost obsession with the JSF within the uniformed ranks. This is their brand new toy," Fitzgibbon, who still holds a senior government role, told local media.

Bogdan said he was not aware of a single partner country in the aircraft wavering in their commitment to the fighter.

"When they buy their airplanes is a different story and I won't comment on any of the partners' notions of when they do that," he said.

Lockheed is building three different models of the F-35 for the U.S. military and eight countries that helped pay for its development: Britain, Canada, Italy, Turkey, Denmark, the Netherlands, Australia and Norway.

The Pentagon plans to buy 2,443 of the warplanes in the coming decades, although many analysts believe U.S. budget constraints and deficits will reduce that number.

(Additional reporting by Ivana Sekularac and Rob Taylor in CANBERRA; Writing by Rob Taylor; Editing by Dean Yates)

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