Pentagon picks Japan, Australia to service F-35s in Asia

(Adds names of companies affected, background on South Korea)

By Andrea Shalal

WASHINGTON, Dec 17 (Reuters) - The Pentagon on Wednesday said it chose both Japan and Australia to carry out heavy airframe maintenance for the Lockheed Martin Corp F-35 fighter jet in Asia, given the high cost of transporting jets across vast distances in the region.

Japan would handle heavy maintenance for the jets in the northern Pacific from early 2018, with Australia to handle maintenance in the southern Pacific, the three-star general who runs the F-35 program for the U.S. Defense Department told reporters.

Heavy maintenance of the F135 engine that powers the jet would initially be done in Australia for the Asian region, with a similar site to be set up in Japan after five years, said Air Force Lieutenant General Chris Bogdan. The engine is built by Pratt & Whitney, a unit of United Technologies Corp.

The news reflects the growing maturity of the $399 billion weapons program, with over 120 jets already produced and U.S. and foreign militaries gearing up to start operating the jets around the world in coming years.

Involving other countries that are buying the jets will help drive down the cost of operating and maintaining a global F-35 fleet that will be flying for the next 50 years, Bogdan said.

He said the F-35 program office would reexamine the maintenance assignments every two to three years, providing opportunities for other countries with F-35s to benefit from a market valued at billions of dollars in coming years.

In Japan, the airframe maintenance decision benefits Mitsubishi Heavy Industries (Other OTC: MHVYF - news) , which is already slated to run the final assembly and checkout plant being built in Japan. Future (LSE: FUTR.L - news) engine work in Japan would be done by IHI Corp, which is already building engine components for Japan's F-35 jets, according to a source familiar with the program.

In Australia, the airframe maintenance work could be done by Britain's BAE Systems (LSE: BA.L - news) , although the Australian government could opt to compete the work, the source said.

He said the Pentagon would consider sites for other service work as the F-35 fleet grows, including repairs of components.

Last week, the Pentagon said Italy and Turkey would handle initial heavy maintenance in Europe of the F-35 jets and their engines, with Norway and the Netherlands to join Turkey in carrying out engine repairs in coming years. It is also setting up maintenance sites in the United States.

Bogdan said countries operating the F-35 could develop their own capacity to handle certain repairs, but heavy maintenance work on the engines and airframes would have to be done at one of the regional maintenance sites. Those sites will be operated under the oversight of the U.S. government, along with Lockheed.

Bogdan said U.S. officials opted for two airframe maintenance sites in Asia since transporting jets some 7,000 miles from one site to another would cost too much and require large amounts of refueling support.

The general declined comment when asked whether South Korea would have its F-35s serviced in Japan, its former adversary. He said discussions were under way with various countries that are slated to buy F-35s about where their jets would be serviced.

Two sources familiar with the program said South Korea had not serviced any of its military equipment in Japan since the end of World War Two, which meant Seoul was likely to send its jets to Australia or the United States for heavy maintenance.

However, a decision may not be finalized for some time since Seoul is not due to receive the first of its F-35 aircraft until 2018, the sources said.

(Additional reporting by Timothy Kelly in Tokyo; Editing by Bernard Orr)