Canada talks to bidders to map out fighter jet competition

By Tim Hepher and Andrea Shalal

RAF FAIRFORD, England (Reuters) - Canada talked to potential bidders on Thursday to map out next steps in a protracted effort to replace an ageing fleet of CF-18 fighter jets built by Boeing (BA.N), industry and government officials said on Friday.

Defence ministry spokesman Evan Koronewski said Ottawa would assess its options over the summer, in part to determine if Canada needed to purchase all 65 jets it initially planned.

Representatives of Boeing, Eurofighter (AIR.PA), Lockheed Martin (LMT.N) and Saab (SAABb.ST) took part in a conference call with Canadian agencies on Thursday, a second government spokesman said.

France's Dassault (AVMD.PA) did not take part but expressed interest in meeting with Canadian officials next week at the Farnborough International Airshow outside London, he said.

Koronewski said the government would consider issues such as cost, delivery times, readiness, interoperability with North American Aerospace Defense Command and economic benefits.

Boeing wants Canada to buy its F/A-18E/F Super Hornet, which is nearing the end of production, instead of the Lockheed F-35 fighter that was backed by the previous Conservative government.

Canada paid to help develop the F-35, and many Canadian firms produce parts for the plane, but those orders could disappear if Ottawa opts for a rival, since countries that order jets are entitled to industrial participation in the programme.

Canada's ruling Liberals government vowed during the 2015 election campaign to ban the F-35 from a new competition, though officials have since softened their stance. Lockheed has said it could shift nearly $1 billion (£772 million) in orders from Canadian firms if Ottawa quit the programme.

Lockheed, which is showcasing the F-35 at two British air shows this month, welcomed Thursday's call.

"We believe this is a positive first step to an open competition and Lockheed Martin remains confident that the F-35 is the best and most affordable solution," said Lockheed spokesman Joe LaMarca.

Lockheed says it believes the plane could win in an open competition given its stealthy characteristics and a drop in costs since bids were initially submitted.

Lockheed officials say the F-35 will cost around $85 million, including an engine, in 2019.

Boeing argues its Super Hornets would cost less, and is also offering Canadian firms work on its commercial jets if Ottawa decides to buy the F/A-18E/F.

"Boeing stands ready to support the government of Canada’s consultation process," said a spokeswoman.

Boeing has over the past five years awarded Canadian companies $6 billion in direct contracts, the spokesman added.

(Editing by Elaine Hardcastle and Cynthia Osterman)