U.S. approves Boeing, Lockheed fighter jet sales to Gulf: sources
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The logo of Boeing (BA) is seen in Los Angeles, California, United States, April 22, 2016. REUTERS/Lucy Nicholson/File Photo
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By Andrea Shalal
BERLIN (Reuters) - The United States on Wednesday began notifying lawmakers that it has approved $7 billion in long-stalled sales of Boeing Co (NYSE: BA) fighter jets to Kuwait and Qatar, and more than $1 billion in Lockheed Martin Corp (NYSE: LMT) jets to Bahrain, sources familiar with the decision said.
The sales had been pending for more than two years amid concerns raised by Israel, Washington's closest Middle East ally, that arms sold to Gulf Arab states could be used against it, and criticism of Qatar for alleged ties to armed Islamist groups.
U.S. officials began notifying lawmakers informally about the sale of 36 Boeing F-15 fighter jets to Qatar valued at around $4 billion, and 28 F/A- 18E/F Super Hornets, plus options for 12 more, to Kuwait for around $3 billion, the sources said.
They also told lawmakers about plans to sell 17 Lockheed F-16 fighter jets to Bahrain, plus upgrades of up to 20 additional aircraft.
The deals will be formally announced once the 40-day informal notification process has ended. Then lawmakers will have 30 days to block the sales, although such action is rare.
Reuters reported earlier this month that the U.S. government was poised to approve the long-delayed sales to Kuwait and Qatar.
The State Department said it could not comment on any ongoing government-to-government arms sales.
Delays in the process had caused frustration among U.S. defense officials and industry executives, who warned that Washington’s foot-dragging could cost them billions of dollars of business if buyers grew impatient and sought other suppliers.
The approval of the fighter jet sales comes as the White House tries to bolster relations with Gulf Arab allies who want to upgrade their military capabilities. They fear the United States is drawing closer to Iran, their arch-rival, after Tehran's nuclear deal with world powers last year.
Sources said officials at both the State Department and Pentagon had largely agreed to the deals some time ago, but had been awaiting final approval from the White House.
Qatar, home to the largest U.S. air base in the Middle East, and Kuwait have ramped up military spending after uprisings across the Arab world and amid rising tensions between Sunni Muslim Gulf Arab states and Iran, the region's Shi'ite power.
Both Qatar and Kuwait are part of a 34-nation alliance announced by Saudi Arabia in December aimed at countering Islamic State and al Qaeda militants in Iraq, Syria, Libya, Egypt and Afghanistan.
The sales will boost fighter production for both companies.
Boeing's F-15 line is set to close in 2019 after Boeing completes work on a large order for Saudi Arabia, unless a follow-on order is approved.
As orders slow, Boeing is increasingly relying on technology upgrades and services sales to maintain its revenue stream from fighter jets, Shelley Lavender, president of Boeing's military aircraft division, said in an interview.
The company is adding new technology to the F-15 and F/A-18 and other aircraft, and is refurbishing them on the same assembly lines use to build new aircraft, she said.
When the current fighter jet lines end, that loss of revenue will be offset by upgrade efforts. "We're blurring the traditional lines of new aircraft builds and sustainment," Lavender said.
Boeing's broad portfolio from commercial derivatives rotocraft, autonomous vehicles, fighters and weapons "will allow us to remain healthy for the decades to come," she said.
Byron Callan with Capital Alpha Partner said he expected all three sales to be approved.
(Reporting by Andrea Shalal in Berlin and Rachel Nielsen in Seattle; Editing by Mark Heinrich and Tom Brown)
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