B.C. to benefit from $19-billion Canadian pact to buy F-35 fighter jets

Avcorp and Asco Aerospace's Delta operations are expected to make components for the planes

Former Avcorp CEO Amandeep Kaler left the company after it was acquired in November by French plane-maker Latécoère | Chung Chow

B.C. companies are likely to benefit from the Canadian government's contract to buy 88 F-35A fighter jets for $19 billion to replace the country's aging fleet of CF-18s. 

While Canada's newly finalized agreement is with the U.S. government, aerospace company Lockheed Martin Corp. (NYSE:LMT) and aircraft engine maker, Pratt & Whitney, which is a Raytheon Technologies Corp. (NYSE:RTX) subsidiary, B.C. companies are expected to be involved making some plane components. 

Aircraft maker Latécoère S.A. (Paris:LAT) finalized in November its deal to buy Delta-based Avcorp, which has about 500 employees across Canada and has made folding outboard wing assemblies for the F-35C variant of the fighters the U.S. Marine Corps uses on aircraft carriers. About 375 of Avcorp's employees are based in Delta. 

As of September 2022, Avcorp had delivered 94 sets of those seven-foot-long assemblies that compose the end of a wing, folding up to create more space when stored on an aircraft carrier. Avcorp produces about 30 sets of those assemblies per year and was set a few months ago to deliver 300 more, according to former CEO Amandeep Kaler, who left the company following the transaction with Latécoère. 

Kaler last year told BIV that work on the F-35 program could in the decades to come be worth between $750 million and $1 billion for his company. 

Workers at nearby Asco Aerospace Canada Ltd. have also produced components for F-35 stealth fighters: bulkheads. Asco employs about 100 workers in Delta and its vice-president and general manager Kevin Russell told BIV last year that military contracts helped the company survive the pandemic. 

He told BIV in an email today that the contract is "very good news for Asco [that] it has finally been completed and will help preserve good jobs for many years to come, and give us additional opportunities in the near future to further grow our business with Lockheed."

Given that other U.S. allies, such as Australia, have committed to purchase F-35 planes, were Canada to opt not to buy the planes, there may be a debate over whether Canadian companies would continue to be contracted to build parts. 

Canadian Defence Minister Anita Anand today made the announcement that the contract to buy the F-35s had been finalized.

The Canadian government last March announced that it had chosen the F-35s as the preferred fighter jets after initiating a bid process, and that it planned to buy 88 planes. All that was left to do was to finalize the agreement.

In the 2015 election campaign, the Liberals opposed the previous Conservative government's decision to buy the planes, saying that they intended to find a cheaper option. 

Shares of both Lockheed Martin and Raytheon were underperforming the broader market, and down by about three per cent each. Trading action, however, was likely tied to manoeuvrings in the U.S. House of Representatives and speculation that new Speaker Kevin McCarthy made concessions to ensure his election that included agreeing to defence-spending cuts.

(With files from Tyler Orton)

gkorstrom@biv.com

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