Gloves come off in fight to win Denmark's combat jet order

* Denmark to pick either Boeing (NYSE: BA - news) or Lockheed Martin (Swiss: LMT.SW - news) jets - sources

By Erik Matzen and Jacob Gronholt-Pedersen

COPENHAGEN, April 26 (Reuters) - U.S (Other OTC: UBGXF - news) . defence giants Lockheed Martin and Boeing have stepped up their battle in Denmark to win a $5 billion order for combat jets which is due to be decided next month, with an advertising blitz in newspapers and on billboards by Boeing reflecting the importance they give to winning the deal.

The result of the Danish government's lengthy deliberations is expected to make waves around the global defence market, as several other nations also have to decide whether to replace their aged warplanes with Lockheed Martin Corp's brand new F-35 Lightnings or play safe with cheaper, older-generation planes such as Boeing's F/A-18E/F Super Hornets.

With (Other OTC: WWTH - news) so much at stake in terms of prestige, the bitter rivalry between the two has erupted into a public spat in Denmark as Boeing compares its rival's new aircraft to a scandal over the botched purchase of Italian trains a decade ago.

"The choice of fighter jets is not just about Denmark's defence. It (Other OTC: ITGL - news) 's also about working from day one," Boeing has said in newspaper and billboard ads, in a clear reference to the F-35 which entered service last July for the U.S. Marine Corps but is still completing a development program which began in 2001.

The U.S. Air Force is slated to declare an initial squadron of F-35s ready for combat later this year.

In the ads a full-page photograph shows some of the defective trains that had yet to be fully developed at the time of order. Technical problems with the 85 trains, of which less than half are in use to date, ended up costing the Danish state hundreds of millions of dollars, causing a public outcry.

Towards the end of the campaign which started in March and peaked in April in newspapers, on outdoor billboards, radio spots and door-to-door distribution, Boeing had bought ads worth 9.65 million crowns ($1.5 million), excluding discounts, according to TNS Gallup Adfacts.

But by reminding Danes of a past purchasing scandal, the ad campaign has raised hackles in some quarters over the use of such tactics but nevertheless has also sparked a public debate about the merits of investing in untried technology.

"We don't use such methods in Denmark," said one defence lawmaker who is involved in the decisionmaking process.

"Boeing ought to be careful not to be hit by its own boomerang, if we get disgusted by the company. Right now, Boeing is close to giving me this feeling," the person said in reaction to the ad campaign.

However, in the wider public - more accustomed to ads for organic cheese than fighter jets - the discussion quickly shifted from what type of plane should be purchased to whether Denmark should buy new warplanes at all.

Boeing has defended its advertising.

"The informational campaign was created firmly out of respect and understanding of the documented Danish acquisition process which has a phase of public debate," Tom Bell, the top sales executive for Boeing's defence business, told Reuters.

And Boeing executives are publicly bullish about their chances of winning the Danish order for up to 30 jets, but privately concede winning Denmark would be a long shot, making the ad campaign seem like a last-ditch effort.

"Winning Denmark is absolutely vital for Boeing which has limited firm export orders left for the (Super Hornet) and is desperate for business," said Francis Tusa, Editor of Defence Analysis.

Outside the traditional major arms purchasers in the Gulf, nations currently shopping for fighters include Belgium, Indonesia and Malaysia, while eastern Europe is looking for secondhand aircraft..

The United States is poised to approve two long-delayed sales of Boeing fighter sales to the Gulf including 28 Super Hornets worth $3 billion for Kuwait.

A separate but unfunded U.S. Navy requirement calls for another 12 jets, but Boeing remains keen to win new export orders to shore up future production for its fighters in St Louis.

For Lockheed Martin, losing the Danish order could dent market confidence in the F-35.

Denmark is one of eight original partners that helped fund development of the F-35 and flies Lockheed F-16 jets alongside Belgium, Norway and the Netherlands. Norway and the Netherlands have ordered F-35s and Belgium has expressed interest.

However, the $379 billion F-35 program has been plagued with cost overruns and delays, although U.S. officials say the program has met its cost and schedule targets since a major restructuring in 2010, and acquisition costs are now finally coming down.

Software (Amsterdam: SF6.AS - news) issues and problems with a complex logistics system still pose challenges, according to a U.S. congressional report released this month, which said the lack of a back-up system could potentially ground the U.S. F-35 fleet.

Lockheed officials say they are confident that the new jet's superior data-processing and "fusing" capabilities, coupled with its ability to evade radar, will ultimately prevail over the older-generation Super Hornets.

A third contender in Denmark, the Eurofighter Typhoon made by Airbus Group (Swiss: AIR.SW - news) , BAE Systems (LSE: BA.L - news) and Finmeccanica (Amsterdam: FC6.AS - news) , officially remains on the shortlist, but Danish government sources say it is no longer being considered.

Eurofighter said it was confident of winning more orders after a recent deal for 28 planes in Kuwait. (Additional reporting by Tim Hepher in Paris, Andrea Shalal in Washington; Editing by Greg Mahlich)