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Canada signals decision on replacing jet fighters may come soon

OTTAWA, May 29 (Reuters) - Canada signaled on Thursday it is likely to make a decision in the next few weeks on whether to replace its aging CF-18 fighter jets with F-35 stealth fighters from Lockheed Martin Corp or hold an open competition among aircraft makers.

Public Works Minister Diane Finley said on Thursday the Conservative government will finish its review of reports on how to replace its jet fighters in the coming weeks. Her spokesman, Marcel Poulin, said both a government decision on how to proceed and the release of the review are likely to come in that period.

After running into a storm of criticism, the Conservative government pressed the reset button in 2012 on its original plan to buy 65 F-35 stealth fighters from Lockheed Martin Corp for C$9 billion ($8.3 billion) without holding an open tender.

The government has since invited other manufacturers to provide details on their fighters, and the Royal Canadian Air Force alongside an independent four-member panel has evaluated the various options.

"Over the next few weeks, ministers will finish reviewing a number of reports relating to the evaluation of options, industrial benefits, costs and other factors related to the decision to replace our CF-18 fleet," Finley told a defense trade show, adding that a report on the evaluation would be made public soon.

The central question is whether to hold a competitive tender or to return to the original decision to buy the F-35 because it is the only plane that has the advanced capabilities required to meet the military's needs.

The F-35 is billed as the only fighter that can avoid radar detection, and advocates say participation in its manufacturing program will allow Canadians to bid on supplying components for the thousands of F-35s to be bought around the world.

The Conservatives' opponents had slammed the decision not to hold a tender to replace the CF-18s, which came into service in the 1980s, and the government's spending watchdog said the decision to buy the F-35s had been based on bad data from officials who had downplayed the costs and risks.

Lockheed's competitors point out that an F-35 has only one engine, which can be dicey if the engine fails when flying over the Arctic. And they promise guaranteed industrial benefits within Canada if their planes are picked.

The three competitors are:

- The F-18E/F Super Hornet, made by Boeing Co. It is a proven aircraft used heavily by the United States, but the flip side is Boeing may stop making them in the next few years. Boeing's counter on that is that the United States and Australia will still be flying them for decades and Boeing will still service them.

- The Rafale, made by Dassault Aviation SA. France has used it in or over Afghanistan, Libya and Mali, but no country outside of France has bought the plane.

- The Eurofighter Typhoon, built by BAE Systems Plc , Airbus Group NV and Italy's Finmeccanica SpA . More than 390 have been delivered to Germany, Britain, Italy, Spain, Austria and Saudi Arabia.

(Editing by Peter Galloway)