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Friday, August 6, 2010

Oman is interested in buying more F16

By Bob Cox

Lockheed Martin will someday build the last F-16 fighter jet at its Fort Worth plant, but that day is still years away.

Lockheed could be close to landing another foreign order for F-16s after the Defense Department notified Congress on Tuesday that the government of Oman requested permission to negotiate to buy 18 planes, weapons and other equipment worth about $3.5 billion.

It would be Oman's second F-16 purchase after taking delivery of the first of 12 in August 2005. Just a year ago Lockheed's F-16 order backlog was down to about 80 planes, and production was slated to end in 2012. But late last year, Egypt and Morocco each ordered 24 planes, extending the production line another year.

"I think we're into 2013, and 18 F-16s for Oman would extend the line until summer of 2014," Lockheed spokesman Joe Stout said. The F-16 order backlog was 81 planes at the end of June.

The Oman deal still faces several hurdles. Congress has 30 days to veto the proposed sale. If that does not occur, the U.S. government would extend a formal offer to sell planes to Oman. Once that offer is accepted, Oman and Lockheed would negotiate terms of a sale.

The Block 50/52 model aircraft Lockheed is now building and delivering to most foreign customers is essentially on a par with the latest aircraft operated by the U.S. Air Force.

In addition to the 18 planes, at cost of $60 million each, Oman would purchase weapons systems, radars, navigation and other electronics systems. It would also get upgraded components for its 12 existing F-16s.

The Defense Security Cooperation Agency, which handles controlled weapons sales, said in its message to Congress that the proposed sale would not upset the military balance of power in the Middle East and would enable Oman to cooperate with U.S. and allied forces.

Lockheed delivered 31 F-16s last year. It is building about two a month, with 11 delivered in the first six months of 2010. Teal Group aerospace analyst Richard Aboulafia said it's conceivable that F-16 production could extend beyond 2015 or well beyond if a couple of large deals are consummated. "If you adjust [the price] for inflation, the F-16 is an incredibly good deal," he said.

Lockheed is pressing India to select the F-16 for an order of 126 multirole fighters the nation has been considering buying in a drawn-out procurement process. Taiwan would like to buy 66 new model F-16s, but both the Bush and Obama administrations have refused for fear of upsetting China.

Sales of the F-35 joint strike fighter were supposed to have sealed the fate of the F-16, but years of delays and soaring cost estimates could keep the F-16 production line going.

"The most interesting thing is Israel. Given the sticker shock they seem to be having about the F-35, they could decide to opt for a high-low mix of some F-35s and more F-16s," Aboulafia said.

He said Israel and other F-16 owners could decide to buy some additional jets over the next several years to replace their oldest planes.

Bob Cox, 817-390-7723

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