Finland orders 64 Lockheed F-35 fighter jets for $9.4 billion

© Reuters. FILE PHOTO: A Lockheed Martin F-35 aircraft is seen at the ILA Air Show in Berlin, Germany, April 25, 2018. REUTERS/Axel Schmidt/File Photo/File Photo/File Photo

By Essi Lehto and Mike Stone

HELSINKI/WASHINGTON (Reuters) - Finland has chosen U.S. defence giant Lockheed Martin (NYSE:LMT)'s F-35 fighters to replace ageing F/A-18 combat jets and plans to order 64 planes with weapons systems in a $9.4 billion deal, the government said on Friday.

Lockheed Martin competed in a tender for the deal with Sweden's Saab, U.S. rival Boeing (NYSE:BA), France's Dassault and Britain's BAE Systems (OTC:BAESF).

The procurement from Lockheed, including weapons as well as service and maintenance until 2030, is estimated to cost 8.378 billion euros ($9.44 billion), the government said.

The construction of hangars and other equipment will add a further 777 million euros, and 824 million euros will be reserved for the final optimised weapons package and to control future contract amendments, it added.

"When comparing military performance, the F-35 best met our needs," Defence Minister Antti Kaikkonen told a news conference.

Military planemakers have been vying for the deal since late 2015, when the Finnish defence ministry began the search for a new jet to replace Finland's old Hornet fighter bought in 1992 from McDonnell Douglas, now part of Boeing.

Finland is the 14th nation to opt for the F-35. It will begin phasing in the F-35 from 2027 onwards, said Airforce Commander Pasi Jokinen.

The choice strengthens the small Nordic nation's defence cooperation with its allies, most significantly the United States and Norway, said researcher Charly Salonius-Pasternak at the Finnish Institute of International Affairs.

"Finland and Norway already train together in the north so it will be a political decision to determine what intelligence is shared and when," he told Reuters, referring to the potential for the jets to share data in real time.

Unlike Norway, Finland is not a member of the North Atlantic Treaty Organisation (NATO) but it has forged stronger ties with the organisation in recent years and chosen military equipment compatible with NATO members.

In 2014 Finland and Sweden, which is also not a NATO member, signed an agreement to train together and allow NATO assistance in crisis situations.

"The F-35 will provide Finnish industries unique digital capabilities that leverage 5th generation engineering and manufacturing," said Bridget Lauderdale, Lockheed Martin's vice president and general manager of the F-35 programme.

"The production work will continue for more than 20 years, and the F-35 sustainment work will continue into the 2070s," Lauderdale said in a statement.

Rival jetmakers expressed their disappointment with Finland's decision with Saab Chief Executive Micael Johansson saying he was somewhat surprised the F-35 had fallen within budget.

France's Dassault said said the choice of a U.S. aircraft was regrettable.

"Once again, we notice and regret an American preference prevailing in Europe," Dassault said in a statement.

Boeing said it still sees significant international interest in its F/A-18 Block III Super Hornet and EA-18G Growler.

Sweden, a neighbour to Finland and home to Gripen maker Saab, said it regretted the outcome while also respecting the decision.

"Our excellent defence cooperation will of course continue. Finland will continue to be our closest security and defence policy partner," Sweden's Ministry of Defence said in a statement.

Reuters reported earlier on Friday that Lockheed Martin was set to win the contract.

($1 = 0.8871 euros)

(This story corrects the spelling of Micael Johansson's name)