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BRAZIL MAY CANCEL FIGHTER JET PURCHASE

2 Jan 02. Brazilian President Luiz Inacio Lula da Silva suggested on Thursday a $700m deal to buy up to 24 new supersonic fighter jets may be suspended and the money used to help the poor instead, his spokesman said.

The tender, which would be one of the biggest arms deals in recent Latin American history, was launched under former President Fernando Henrique Cardoso and has been hotly contested by heavyweights like Lockheed Martin (NYSE:LMT – News), BAE Systems Plc (London:BA.L – News) and Brazil’s Embraer (Sao Paolo:EMBR4.SA – News; NYSE:ERJ – News). Lula was sworn in on Wednesday after winning October elections.

“Perhaps this would be the inadequate moment for Brazil,” to buy fighter jets, Lula’s spokesman Andre Singer said during the presidential briefing on Lula’s first working day. “Maybe the $1 billion can be used on the program to fight famine. But no final decision has been taken.” With Brazil’s budget stretched by tight budget goals under a $30bn IMF loan deal, there are precious few resources for Lula’s “zero famine” program to help Brazil’s estimated 54 million poor. Lula has said the program is his absolute priority.

Some observers have suggested Brazil does not need 24 new supersonic jets even though its air force fleet is aging, with about 50 percent of planes grounded. The tender has already been delayed repeatedly.

Lockheed Martin is competing with its F-16 fighter, BAE is competing together with Sweden’s Saab (Stockholm:SAABb.ST – News) with the Gripen fighter while Embraer and France’s Dassault Aviation SA (Paris:AVMD.PA – News) are offering a special version of Dassault’s Mirage strike plane. Russia’s Sukhoi is bidding with its Su-35 “Super Flanker” fighter.

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