(Bloomberg) — Finland selected Lockheed Martin Corp. to supply a fleet of fighter jets in an $11 billion procurement, replacing aging warplanes that now defend the territory of Russia’s Nordic neighbor.
Lockheed will provide 64 F-35A aircraft and an extensive weapons package, Defense Minister Antti Kaikkonen said at a news conference in Helsinki on Friday. The non-NATO member of the European Union had also considered offers from Boeing Co., Dassault Aviation SA, the Eurofighter consortium and Saab AB.
The new fighters with air-to-surface and air-to-sea capabilities will be used to secure a 1,300-kilometer (800-mile) border with Russia. While Finland can muster 180,000 troops for wartime service through national conscription, its landmass is too large to defend without warplanes.
The cost of the program is 10 billion euros ($11 billion), of which about 4.7 billion euros are spent on the multi-role fighters. Service equipment, spare and exchange parts, training and other services until the end of 2030 cost 2.9 billion euros, and weapons about 1.5 billion euros. Industrial cooperation accounts for almost a third of the order price. An additional 1 billion euros will be used to build related local systems and capabilities.
What clinched the decision for Lockheed was the planes’ superior combat, reconnaissance and survival capabilities relative to the other contenders, including its stealth and networking abilities, Kaikkonen said.
Having stayed out of the North Atlantic Treaty Organization, Finland works closely with the bloc and uses compatible gear. It’s also keen to keep the U.S. invested in its security.
Finnish-U.S. ties “will likely further intensify in certain areas, such as in intelligence sharing,” Matti Pesu, a senior researcher at Finnish Institute of International Affairs, said by email after the decision.
The contract gives Lockheed a much-needed boost as the U.S. defense giant grapples with a strained supply chain, a tightening regulatory environment and the prospect of falling revenue next year. The company has said a strategic repositioning could help it recover beginning in 2023.
Lockheed’s shares have fallen 3.2% this year through Thursday’s close, trailing well behind the 24% gain in the S&P 500 Index.
“The F-35 will provide Finnish industries unique digital capabilities that leverage 5th generation engineering and manufacturing,” Bridget Lauderdale, general manager of the F-35 program at Lockheed Martin, said in a statement.
Swiss Choice
Finland’s decision comes months after Switzerland, another European nation that hasn’t joined NATO, picked the F-35 in a 5 billion-Swiss franc ($5.4 billion) defense order. The Swiss cited the U.S. aircraft’s technical superiority and said it had the “lowest overall cost” both when bought and over its lifetime.
Buying planes from a U.S. manufacturer creates and maintains “stronger professional ties” to the U.S. military, “which might come handy in a crisis,” Robert Dalsjo, a research director at the Swedish Defence Research Agency, said. Another benefit is a “wider set of weapons already integrated and large stocks from whence more could be bought in a pinch” as well as access to new weapon types in the future, he said.
The planes will replace Finland’s fleet of 64 Boeing F/A-18 Hornets that will be retired in stages in 2025 to 2030, with the new aircraft set to be operational in 2027 and in service until the 2060s. But improving its military capability hasn’t gone unnoticed in Russia.
“Kremlin is concerned with how anti-Russian Finland became since 2014,” said Ruslan Pukhov, Moscow-based defense analyst at the Centre for Analysis of Strategies and Technologies. “The F-35 contract will just convince Russia that Finland is getting closer to the U.S.” and “more hostile toward Russia.”
Tensions between Western nations and Russia are mounting, after Russian deployment of more than 100,000 troops, tanks, artillery and other heavy equipment on its borders with Ukraine. President Vladimir Putin has said he has no plans to invade, but he wants NATO to stop what he has called encroachment on Russia’s western periphery.
“Regardless of the company or country from which Finland purchases its aircraft, Russian propaganda will cover this only in a negative way,” said Martin Hurt, a researcher with Tallinn-based International Centre for Defence and Security. “Russia is taking every opportunity to show that it is surrounded by enemies.”
(Updates with comment from defense minister in fifth paragraph)
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