Lockheed said to land F-16 deal U.A.E. reportedly will purchase up to 80 jets

$6 billion to $8 billion

'Major victory' seen

announcement is expected today

May 12, 1998|By Greg Schneider | Greg Schneider,SUN STAFF

The United Arab Emirates will announce today that it plans to buy up to 80 F-16 fighter planes from Lockheed Martin Corp. in a deal valued at between $6 billion and $8 billion, sources said yesterday.

The order would boost more than sales for the Bethesda defense contractor.

It would assert U.S. dominance of the global warplane market, certify Lockheed Martin's position as the world's leading supplier of midrange fighter jets and keep the F-16 production line in Fort Worth, Texas, humming into the next century.

"It's a major victory for Lockheed Martin, and really for this decade it's one of the major victories in international sales," said Brett Lambert of the defense consulting firm DFI International.

The U.A.E. also had been considering the French Rafale and the multinational Eurofighter for its jet fighter purchase.

An 80-plane purchase is not that large on a historical scale, experts said, but is considerable in the current climate of scaled-back military spending.

The only similar deal on the horizon is a possible 100-plane purchase by Saudi Arabia, expected in the next year or two.

The U.A.E.'s decision to go with the F-16 might give the plane an advantage in the Saudi competition as well, experts said.

Northrop Grumman Corp.'s Electronic Sensors & Systems Division in Linthicum also stands to gain from the U.A.E. purchase; the company makes the radar system for the F-16.

Spokesman for both companies declined to comment on news of a U.A.E. decision.

The White House issued a statement promising that Vice President Al Gore will join the crown prince of the U.A.E. today "for an announcement regarding thousands of new jobs for Texas workers."

Gore also is scheduled to travel to Lockheed Martin Tactical Aircraft Systems in Fort Worth on Friday for a rally connected with the announcement.

Lambert said the government is still negotiating with the U.A.E. over what type of missile technology to include with the planes.

The European candidates had promised advanced missile systems; the fact that the U.A.E. would settle on F-16s without that aspect resolved shows how badly such countries want U.S. military hardware, Lambert said.

Lockheed Martin shares rose 6.25 cents to close at $112.50 yesterday. Some on Wall Street were already counting on the U.A.E. sale. "We actually had that factored in to our numbers, so there's not a lot of additive earnings," said Roger Threlfall of J. P. hTC Morgan Securities.

"The importance of it is it extends the F-16 line and continues the strong international performance of the F-16," he said.

The only new warplane that Lockheed Martin is currently slated to build is the expensive, high-performance F-22 fighter jet -- not yet approved for export, a market that plays an increasingly prominent role in the defense industry's bottom line.

That makes keeping the F-16 alive even more important, said Richard Aboulafia, a military aircraft expert with the Teal Group defense consulting firm.

"Also, this should persuade the corporation to develop new versions that will keep the F-16 competitive into the next century," Aboulafia said.

Upgrades such as enhanced range and better radar could boost the plane's performance within reach of the next generation of advanced fighters -- an extraordinary claim for a plane first produced during the 1970s, he said.

The F-16 is already on its way to becoming the second most popular fighter plane in modern aeronautical history, Aboulafia said.

The 4,000th F-16 will leave the assembly line sometime in the next two years, passing the F-5 in number and trailing only the Northrop F-4 fighter, which topped 5,000 planes during a two-decade production period.

Pub Date: 5/12/98

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