Canadian election results seen as bad news for Lockheed's F-35

By Andrea Shalal

WASHINGTON, Oct (HKSE: 3366-OL.HK - news) 20 (Reuters) - The election of Canada's Liberal leader Justin Trudeau as prime minister spells bad news for Lockheed Martin Corp's F-35 advanced fighter jet program because last month Trudeau said he would not buy the plane if elected, U.S (Other OTC: UBGXF - news) . industry and government sources said on Tuesday.

Trudeau's election perhaps offers hope to Boeing Co (NYSE: BA - news) , whose F/A-18E/F fighter jets are nearing the end of production and the company could be considered as a supplier of a new fighter jet.

Industry executives and government officials said there would be difficulty ahead for the F-35 program.

"Trudeau hasn't left himself any outs. His statements were very categorical," said one source, who is familiar with the situation but was not authorized to speak publicly.

Trudeau opposes the F-35 purchases and said money saved by switching to another plane could help fund needed Navy projects. Last month he said that, if elected, his party would launch an open and transparent competition to replace Canada's aging CF-18 fighter jets with more affordable aircraft.

For now, Canada remains one of the nine partner countries that funded development of the F-35 fighter jet. Canada pledged to invest $150 million in the program's development when it signed up in February 2002.

Those funds will not be reimbursed if Canada exits the program, and many Canadian companies that now supply parts to Lockheed could see those orders disappear, said one source familiar with the program.

The Pentagon's F-35 program and Boeing had no immediate comment.

Lockheed said only that it had not been notified by the Canadian government of any change in its status as a partner in the F-35 program.

"They are a valued partner and we will continue to support them through their decision process to replace their ageing CF-18 fleet," said Lockheed spokeswoman Alison Orne.

The loss of 65 F-35 orders would cut Lockheed's future revenues by well over $6 billion, and would also affect engine maker Pratt & Whitney, a unit of United Technologies Corp , and other suppliers such as Northrop Grumman Corp and Britain's BAE Systems Plc (Other OTC: BAESF - news) .

Canada's ruling Conservatives announced plans in 2010 to buy 65 F-35 jets, but scrapped those plans in 2012 after a probe found officials had played down the costs and risks of the deal.

A subsequent review found that Lockheed's F-35 scored well on various tests, but Boeing Co's F/A-18E/F Super Hornet was almost as capable and cheaper. (Reporting by Andrea Shalal; editing by Grant McCool)