November 22, 2013 6:50 am

South Korea agrees Lockheed stealth fighter jets deal

South Korea decides to buy 40 Lockheed F-35 fighters©EPA

An F-35 stealth fighter

South Korea has agreed to buy 40 F-35A fighter aircraft from Lockheed Martin, putting its air force on the same level as China and Japan in next-generation stealth jet technology.

Seoul surprised many observers in September by reopening its tender for 60 fighter jets, confounding predictions that it was poised to select Boeing's F-15 aircraft. Boeing’s bid had been the only one that met the stated $8bn cost limit.

On Friday, the defence ministry said the F-15 and Eurofighter’s Typhoon did not meet its revised technical requirements, leaving only the F-35, which has stealth capabilities that allow it to escape detection by modern radar systems.

The 40 F-35 jets would be delivered beginning in 2018, the country’s joint chiefs of staff said, adding that Seoul will continue to ponder the procurement of the remaining 20 aircraft that it requires. They did not reveal the value of the deal.

“We have changed our [requirements] because the next-generation fighter jets should be able to attack targets after infiltrating into the enemy's territory secretly and to cope with North Korea's realised nuclear and missile threats,” they said in a statement.

However, they said they had also taken account of “neighbouring countries’ stealth capabilities” – a reference to Japan, which ordered 42 F-35 jets in 2011, and China, which is developing a plane with similar specifications, the Chengdu J-20.

“We don’t want to call it an arms race but . . . there is an understanding that the strategic balance in northeast Asia needs to be maintained with China and Japan – especially the latter,” said Jon Grevatt, an analyst at the defence consultancy IHS.

Recent political debate in Tokyo over revising the country’s pacifist constitution has sparked alarm in Seoul amid a bitter dispute over Japan’s imperial history and this “must have been a factor” in South Korea’s decision to procure the most advanced fighter jet on the market, Mr Grevatt added.

The decision to buy only 40 jets was in line with previous speculation that South Korea would reduce the volume of its order to secure the F-35 without exceeding its stated budget.

The defence ministry said it still planned to purchase a further 20 fighter jets, to be introduced from 2023, and would “reconsider the requirements” as it moves on to this second stage of the tender. This leaves open the possibility of an order – albeit much smaller than it had hoped – for Boeing, which responded to the announcement by saying it remained confident that the F-15 was “what Korea needs to meet its defence needs”.

But the likelihood of an order for F-15s was slim, said Yang Uk, a researcher at the Korea Defense and Security Forum. “Once they’ve decided to go for the F-35, they are unlikely to buy other types of fighter jets, given the economies of scale. The more they buy, the more they can negotiate down the prices.”

The price for the 40 F-35s was likely to have been about Won7tn ($6.6bn), he estimated.

To win the deal . . . Lockheed Martin promised to help South Korea build its own . . . fighter

For Lockheed Martin, the world’s largest defence contractor, the sale will be a relief. Though it is so far weathering well the worst defence downturn in 20 years – it’s share price is close to all time highs – analysts predict the streak will not last much longer as US defence cuts begin to accelerate in the coming two years.

Its F35 programme, whose engines are made by Pratt & Whitney of the US and which has BAE Systems of the UK as its main international partner, has been especially troubled by years of delays caused by technical setbacks and cost overruns. This has prompted some of its cash-strapped customers, including the governments of the UK and Canada, to reduce their orders or reconsider buying the jet altogether.

To win the deal for it’s super stealthy fighter, Lockheed Martin promised to help South Korea build its own radar-evading fighter.

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