Canadian defense officials strongly recommend sticking with Lockheed Martin Corp. (NYSE:LMT) F-35 fighter jets over European alternatives, despite cost overruns threatening the C$19 billion ($14 billion) program.

Defense Officials Back F-35 Plan Despite Budget Concerns

Two sources familiar with the defense review told Reuters that military officials made a compelling case for maintaining the 88-aircraft order rather than splitting it between U.S. and European manufacturers. The review stops short of a formal recommendation, leaving the final decision with Prime Minister Mark Carney‘s government.

Cost Surge Threatens Project Timeline

Canada’s top independent watchdog warned in June that F-35 procurement costs will exceed initial estimates by at least 45%. The project also faces significant pilot shortage challenges that could delay implementation.

The warning comes after Canada unveiled the defense deal in early 2023, marking one of the nation’s largest military procurements. Ottawa has already committed legal funding for the first 16 F-35 aircraft under the agreement.

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Military Integration Drives Strategic Decision

Defense Ministry analysis concluded that splitting the order between U.S. and European suppliers would create military inefficiencies. The F-35 represents the most advanced fighter technology available, while alternative European jets would require additional training, supply chain, and maintenance costs.

Trade Relations Influence Defense Strategy

The decision could remove potential friction in U.S.-Canada relations as trade negotiations remain stalled. Carney initially requested the military review in March, citing concerns about over-reliance on U.S. defense contractors.

Defense Minister David McGuinty‘s office reiterated its commitment to “procuring what the air force needs, while ensuring economic benefits for Canadians and responsible taxpayer dollar use.”

Canada’s F-35 program began in 2010 but faced major delays due to government changes, procurement rule modifications, and pandemic-related challenges. Spain recently abandoned F-35 consideration, choosing European alternatives instead, according to Reuters.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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