(Adds aviation analyst comments)
By David Ljunggren and Leah Schnurr
OTTAWA Nov 22 Canada on Thursday unveiled plans
to buy 18 Boeing Corp Super Hornets as a stop-gap measure
while it prepared an open five-year competition to replace its
aging fleet of fighter jets.
Procurement Minister Judy Foote told a news conference the
government would launch immediate talks with Boeing for the
Super Hornets, in a victory for the U.S. plane maker if the
order goes ahead.
One defense contractor said the choice could be interpreted
as giving Boeing a long-term advantage but Foote, speaking in a
phone interview, later said Ottawa would run "a real, open,
transparent competition" where any firm could compete.
The language of Canada's announcement prompted speculation
about whether it was buying the Boeing jets outright, leasing
them or purchasing with a buyback provision.
An outright purchase of the Super Hornets would make it
harder for Canada to later justify acquiring other jets as it
would be more costly to operate both programs, said U.S.
aerospace industry analyst Richard Aboulafia of the Teal Group.
Spokespeople for Foote and Defence Minister Harjit Sajjan
did not immediately respond to requests for comment. A Boeing
Defense spokesman declined to comment.
The decision on how to replace Canada's CF-18 jets - some of
which have been flying for 35 years - is politically sensitive
and has been repeatedly put off.
Sajjan said the CF-18s could no longer meet Canada's
international military commitments.
"Because they were not replaced, we now have a capability
gap ... we need additional planes as soon as possible for an
interim period," he told the news conference.
The former Conservative administration said in 2010 it would
buy 65 Lockheed Martin Corp F-35 jets for C$9 billion
($6.7 billion). During last year's successful election campaign,
the Liberals vowed not to buy the planes on the grounds they
were too costly.
Sajjan said Canada would remain a member of the nine-nation
consortium that helped fund development of the F-35.
Lockheed Martin said that while it was disappointed with the
choice of an interim fighter it was "confident the F-35 is the
best solution", according to a statement.
Ottawa insists the winner of the open competition must
provide industrial benefits to Canadian firms. It also wants the
companies to have a chance of getting work from the interim
order with Boeing, Foote said.
Boeing is committed to giving Canadian companies contracts
that would equal the total amount Ottawa pays for the 18 Super
Hornets, said Scott Day, spokesman at Boeing Defense.
Foote said talks would start immediately with Boeing though
a final decision would only be made once the discussions were
over. Sajjan, though, said he was confident the Boeing plane met
The government declined to answer any questions on cost, in
particular whether the money set aside for the interim order
would come out of the initial budget for the planes.
Boeing's stock rose after the announcement and closed up 1.7
percent at $149.52, while Lockheed Martin shares pared gains to
end the day at $264.66, up 0.5 percent.
(Additional reporting by Allison Lampert in Montreal and Mike
Stone in Washington; Editing by Bernard Orr and Alan Crosby)