AEROSPACE INDUSTRIAL DEVELOPMENT CORPORATION

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Exclusive-U.S. seeks way to speed delivery of new fighter jets to Taiwan

01/20/2022 | 11:33am EDT
FILE PHOTO: Taiwan Air Force's F-16 fighter jets fly during the annual Han Kuang military exercise at an army base in Hsinchu

WASHINGTON (Reuters) - The United States is looking for ways to potentially accelerate delivery of Taiwan's next generation of new-build F-16 fighter jets, U.S. officials said, bolstering the Taiwanese air force's ability to respond to what Washington and Taipei see as increasing intimidation by China's military.

The officials, speaking on condition of anonymity, said they have not yet come up with a solution on how to speed delivery of Block 70 F-16s, manufactured by Lockheed Martin and equipped with new capabilities. The aircraft are currently slated to be delivered by the end of 2026.

Taiwan's government has privately expressed its wish for a faster delivery to U.S. President Joe Biden's administration, a senior Taiwanese official said, as the self-ruled island's air force scrambles jets to intercept increasingly aggressive Chinese military flights.

More missions mean more wear-and-tear on Taiwan's aircraft.

"It's all about risk assessment ... and it's clear where the risks are," the Taiwanese official said, referring to tensions across the sensitive Taiwan Strait separating the island from mainland China. The F-16 is considered a highly maneuverable aircraft proven in air-to-air combat and air-to-surface attack.

Taiwan is on track to field one of the largest F-16 fleets in Asia once it takes delivery of 66 new-build F-16 C/D Block 70 aircraft under an $8 billion deal approved in 2019. It would bring the island's total number of F-16s, including older versions, to more than 200 by 2026.

Any move to accelerate deliveries of new aircraft could ultimately come down to a determination by Biden's administration that Taiwan's defense needs are more urgent than those of other U.S. allies and partners, according to experts.

"That's a Biden administration decision," said Rupert Hammond-Chambers, the president of the US-Taiwan Business Council, an organization that encourages trade and business ties between the two. "They would have to decide that the threat from China was more important than the threat from Iran or the threat from the Russians."

The Block 70 aircraft are the newest F-16 configuration, with new avionics, a modernized cockpit and an improved engine, according to Lockheed Martin.

A move to accelerate the aircraft delivery would be seen in Beijing in part through a political lens, according to Abraham Denmark, a former senior Pentagon official.

"It is yet another clear signal of U.S. determination to support Taiwan's ability to defend itself," added Denmark, now an analyst at the Washington-based Wilson Center think tank.

DWARFED BY CHINA

Despite lacking formal diplomatic ties with Taiwan, the United States is the island's main international backer and arms supplier. That defense relationship angers China, which has ramped up military and diplomatic pressure against the island that it claims as "sacred" Chinese territory.

In the face of Chinese pressure, Taiwan President Tsai Ing-wen has prioritized modernizing the armed forces, which are well-armed but dwarfed by China's military.

Lockheed Martin declined to comment on any potential future requests to change the production schedule, referring queries to the U.S. government and Taiwan's defense ministry.

The U.S. State Department, which oversees foreign military sales, declined to comment on any internal discussions about potential changes to the delivery timeline.

Lockheed Martin's new F-16 production line in Greenville, South Carolina has several customers in the production queue ahead of Taiwan, including Bahrain, Slovakia and Bulgaria.

The U.S. government has not asked Lockheed Martin for delivery timeline changes for the Taiwanese F-16 jets, a person familiar with the situation said.

The source declined to speculate about how much sooner Taiwan could get new-build F-16s even if a decision were made to accelerate deliveries. Any such effort would be complicated by production constraints, which include long lead times to source materials for Taiwan's specific configuration of fighter aircraft.

Taiwan's Air Force did not respond to questions on potential accelerated deliveries but told Reuters in a statement that the Taiwanese military's major weapon purchases are "rigorously planned in accordance with actual combat needs and planning schedules."

The U.S. sale of F-16s to Taiwan was guided by U.S. law and "based on an assessment of Taiwan's defense needs and the threat posed by (China), as has been the case for more than 40 years," a Pentagon spokesperson said in a statement.

'WEARING OUT THEIR OPPONENT'

The missions to intercept Chinese aircraft are putting stress on Taiwan's air force, which last year had several mishaps, including three fatal crashes. Over time, fuel costs, pilot fatigue and wear and tear on Taiwanese aircraft will threaten the readiness of the island's air force if this pressure continues, Taiwanese and U.S. military analysts said.

Last March, a senior Taiwanese official said Taiwan's military had stopped intercepting every Chinese aircraft.

Taiwan's air force last week suspended combat training for its entire F-16 fleet after a recently upgraded model of the fighter jet crashed into the sea in the latest of a series of accidents.

"They (the Chinese) are wearing out their opponent without firing a shot," said Derek Grossman, a senior defense analyst at the RAND Corporation.

Taiwan's air force in 2020 scrambled 2,972 times against Chinese aircraft at a cost of T$25.5 billion ($905 million).

(Reporting by Phil Stewart and Idrees Ali in Washington and Yimou Lee in Taipei; Additional reporting by Mike Stone in Washington; Editing by Will Dunham and Mary Milliken)

By Phil Stewart, Idrees Ali and Yimou Lee


© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AEROSPACE INDUSTRIAL DEVELOPMENT CORPORATION 1.35% 33.75 End-of-day quote.14.99%
EURO / SOUTH AFRICAN RAND (EUR/ZAR) 0.02% 16.8661 Delayed Quote.-7.85%
LOCKHEED MARTIN CORPORATION 2.09% 433.03 Delayed Quote.21.84%
MSCI TAIWAN (STRD) 0.00% 603.837 Real-time Quote.-18.64%
US DOLLAR / SOUTH AFRICAN RAND (USD/ZAR) 0.21% 15.81334 Delayed Quote.-0.86%
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Financials
Sales 2022 30 151 M 1 019 M 1 019 M
Net income 2022 1 840 M 62,2 M 62,2 M
Net Debt 2022 14 835 M 502 M 502 M
P/E ratio 2022 17,3x
Yield 2022 3,11%
Capitalization 31 788 M 1 075 M 1 075 M
EV / Sales 2022 1,55x
EV / Sales 2023 1,22x
Nbr of Employees 4 420
Free-Float 61,1%
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Number of Analysts 2
Last Close Price 33,75 TWD
Average target price 44,50 TWD
Spread / Average Target 31,9%
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Managers and Directors
Wan Chun Ma President, General Manager, Director & Spokesman
Hsiu Yan Huang Head-Finance & Accounting
Kai Hung Hu Chairman
Chia Chang Chan Independent Director
Li Chen Lien Independent Director