UPDATE 2-Italy opts against F-35 fighter early phase role

(Adds details on program status, paragraphs 8-10)

By Jim Wolf

WASHINGTON, Oct 10 (Reuters) - Italy has decided against taking part for now in a coming stage of the international F-35 fighter aircraft program, Lockheed Martin Corp (LMT.N: Quote, Profile, Research, Stock Buzz), the primary contractor, said on Friday.

"Italy was studying the possibility of joining the F-35 Initial Operational Test and Evaluation phase but has elected not to participate at this time," the Bethesda, Maryland-based company said in an e-mailed statement.

The F-35 is a family of radar-evading fighters designed to replace aircraft of the United States and eight co-development partners, including Italy, as well as other potential buyers. It is the costliest U.S. arms acquisition program ever at a projected $299 billion.

Italian officials had been considering early purchases of two F-35A models for initial operational test and evaluation. The officials had been weighing buying one as soon as fiscal 2009, with a second the following year.

Italy's decision to steer clear for now would not affect planned yearly increases in F-35 production quantities, said Cheryl Amerine, a Lockheed Martin spokeswoman.

Officials at the Italian embassy in Washington had no immediate comment. Representatives of the Pentagon program office did not return telephone calls seeking comment. Amerine said she did not know why Italy had opted against taking part in the initial operational test and evaluation phase.

"Italy remains a strong partner in the F-35 Joint Strike Fighter program, and will continue as a full participant in F-35 flight test activities," she said.

Britain and the Netherlands are the only other F-35 co-development partners scheduled to participate in the initial operational test and evaluation program. Data from this program is to be shared with all partners.

Two F-35s have entered flight test, two are in ground test and 17 are in various stages of assembly, including the first two production-model jets scheduled for delivery to the U.S. Air Force in 2010, Tom Burbage, executive vice president of Lockheed Martin Aeronautics business unit and general manager of F-35 Joint Strike Fighter program integration, said last month.

Richard Aboulafia of Teal Group, a Fairfax, Virginia, aerospace consultancy, said Italy's decision may reflect pressure on its defense budget as it continues to buy other warplanes.

The F-35's development also was financed by Britain, the Netherlands, Turkey, Canada, Australia, Denmark and Norway. The Netherlands plans to decide early next year whether to buy two F-35s for initial operational tests and evaluation, the Dutch defense attache, Air Cdre A.A.H. de Bok, said in an e-mail to Reuters.

F-35 competitors include Saab's (SAABb.ST: Quote, Profile, Research, Stock Buzz) Gripen, the Dassault (AVMD.PA: Quote, Profile, Research, Stock Buzz) Rafale, MiG-35 and Sukhoi Su-35, and the Eurofighter Typhoon, made by a consortium of British, German, Italian and Spanish companies.

Lockheed's chief F-35 subcontractors are Northrop Grumman Corp (NOC.N: Quote, Profile, Research, Stock Buzz) and BAE Systems Plc (BAES.L: Quote, Profile, Research, Stock Buzz).

Two rival, interchangeable F-35 engines are under development. One is built by United Technologies Corp's (UTX.N: Quote, Profile, Research, Stock Buzz) Pratt & Whitney unit, the other by a team of General Electric Co (GE.N: Quote, Profile, Research, Stock Buzz) and Rolls-Royce Group Plc (RR.L: Quote, Profile, Research, Stock Buzz).  Continued...