Vietnam, South Korea may buy Lockheed planes amid Chinese buildup

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Vietnam is expected to request formal pricing and availability data on four to six older U.S. Navy P-3 Orion aircraft in the next few months, Clay Fearnow, a senior executive with Lockheed's aeronautics division, told Reuters at the Berlin air show last week.

The Obama administration's move to completely lift its arms embargo on Vietnam last month paved the way for such a sale, but any deal would still have to be carefully reviewed by the U.S. government, according to U.S. and Lockheed officials.

Washington's decision to permit lethal arms sales to Vietnam, its former enemy, underscored both countries' shared concerns about China's growing military clout.

Vietnam, which borders China, is also a key part of President Barack Obama's efforts to rebalance U.S. strategy toward Asia amid worries about Beijing's assertiveness and sovereignty claims to 80 percent of the South China Sea (Vietnam's East Sea).

If the sale goes through, retired U.S. Navy P-3 turboprop planes now parked in a desert would be rebuilt with new wings, a new mission system and anti-submarine warfare equipment for Vietnam, Fearnow said.

The cost could exceed the $80 million to $90 million price tag for each of the 12 P-3s rebuilt for Taiwan several years ago, given the added equipment, Fearnow said.

Lockheed has built new wings or rebuilt aircraft for over 90 P-3 aircraft around the world, including the United States, Norway, Taiwan, Chile and Germany, since 2008, with some orders still in the works, Fearnow said.

The company is scrambling to drum up more orders and extend its wing production line in Marietta, Georgia.

Brazil and South Korea are each looking at ordering new wings for existing aircraft, but must decide by September 1 to avoid a potentially costly gap in the supply chain for the wings, he said.

Boeing Co is also marketing its P-8 Poseidon maritime surveillance plane, but it is significantly newer and more expensive than the P-3. Another possible competitor is Airbus Group SE's C295 plane, which is built in Spain.

The U.S. State Department said it could not comment on potential P-3 or S-3 sales until it formally notifies the U.S. Congress.

In addition to South Korea's interest in new wings for eight of its P-3s, Seoul is also looking at acquiring 12 of the U.S. Navy's S-3 aircraft, which were retired in 2009 and are now parked in a desert, Fearnow said.

He said Spain, Portugal and Argentina also had P-3 aircraft that could use new wings, but those countries all face budget pressures. Japan, which has about 100 P-3 aircraft, is replacing them with its own P-1 aircraft, and the U.S. Navy is replacing its P-3 fleet with the Boeing P-8s.

The Philippines also wants to expand its maritime surveillance capabilities, but is still defining its requirements, Fearnow said.