U.S. Air Force sees need for more C-17 cargo planes

By Andrea Shalal-Esa

WASHINGTON (Reuters) - The U.S. military will need more Boeing Co (BA.N: Quote, Profile, Research, Stock Buzz) C-17 transport planes in coming years because some of its huge C-5 transport planes, built by Lockheed Martin Corp (LMT.N: Quote, Profile, Research, Stock Buzz), are just too old to be upgraded, U.S. Air Force Secretary Michael Wynne said on Tuesday.

Pentagon arms chief John Young is currently reviewing a Lockheed program to upgrade engines on all 108 aging C-5 cargo airplanes after the cost soared to $17.5 billion from an initial estimate of $11.1 billion. That increase triggered a congressionally mandated review under the Nunn-McCurdy law.

Wynne told the Reuters Aerospace and Defense Summit that additional issues outside of engine performance are cropping up with the oldest of the C-5s, the A-models which are 35 years old on average.

Given the C-5's advanced age, it makes more sense to retire the oldest and most worn out of these planes, Air Force officials say, and use the upgrade funds to buy more C-17s.

Boeing has said the production line is currently due to close in 2009.

"There comes a time when age does catch up with us," said Wynne, adding that Congress has several times denied Air Force requests to retire the oldest of the C-5 planes.

Lawmakers worry about the economic impact of C-5 retirements on their home districts, since replacement aircraft might be based elsewhere.

Wynne said he did not believe the C-5 upgrade program would be terminated completely, given a continued need for some of the giant planes, the biggest jet-powered cargo planes ever bought by the U.S. Air Force. "There is some cargo for which the C-5 is the right size," he said.

Young had hoped to finish this month his review of the C-5 program, but final decisions on the program could slip into January because of its complexity, one senior defense official said on Tuesday.

The Air Force already has 170 C-17 transport planes, 20 more are on order, and Congress is likely to add 10 more in fiscal year 2008. But the total number could swell to around 250, given problems with the C-5 upgrades, said defense analyst Loren Thompson of the Virginia-based Lexington Institute.

Defense consultant Jim McAleese said there is "a dollar for dollar trade-off between the C-5s and the C-17s."

McAleese told the Reuters summit that the Nunn-McCurdy breach gave the Pentagon a chance to override the historical reluctance of Congress to allow the retirement of aging C-5s.

"It is obvious that the congressional prerogative will be diminished," he said. A compromise allowing the retirement of some C-5s and the purchase of some extra C-17s was likely, McAleese said.

Wynne declined comment on the projected overall need for C-17s, but said the Air Force had a strategic requirement for at least 300 medium and heavy airlift planes to ferry troops and cargo to the battlefield.

That number could rise in coming years due to increased demand for humanitarian missions in the military's newly established African command, Wynne said. "This line should stay open," he said of the Boeing C-17 production line.  Continued...