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* Denmark to pick either Boeing or Lockheed Martin jets -sources
By Erik Matzen and Jacob Gronholt-Pedersen
COPENHAGEN, April 26 (Reuters) - U.S. defence giantsLockheed Martin and Boeing have stepped up theirbattle in Denmark to win a $5 billion order for combat jetswhich is due to be decided next month, with an advertising blitzin newspapers and on billboards by Boeing reflecting theimportance they give to winning the deal.
The result of the Danish government's lengthy deliberationsis expected to make waves around the global defence market, asseveral other nations also have to decide whether to replacetheir aged warplanes with Lockheed Martin Corp's brand new F-35Lightnings or play safe with cheaper, older-generation planessuch as Boeing's F/A-18E/F Super Hornets.
With so much at stake in terms of prestige, the bitterrivalry between the two has erupted into a public spat inDenmark as Boeing compares its rival's new aircraft to a scandalover the botched purchase of Italian trains a decade ago.
"The choice of fighter jets is not just about Denmark'sdefence. It's also about working from day one," Boeing has saidin newspaper and billboard ads, in a clear reference to the F-35which entered service last July for the U.S. Marine Corps but isstill completing a development program which began in 2001.
The U.S. Air Force is slated to declare an initial squadronof F-35s ready for combat later this year.
In the ads a full-page photograph shows some of thedefective trains that had yet to be fully developed at the timeof order. Technical problems with the 85 trains, of which lessthan half are in use to date, ended up costing the Danish statehundreds of millions of dollars, causing a public outcry.
Towards the end of the campaign which started in March andpeaked in April in newspapers, on outdoor billboards, radiospots and door-to-door distribution, Boeing had bought ads worth9.65 million crowns ($1.5 million), excluding discounts,according to TNS Gallup Adfacts.
But by reminding Danes of a past purchasing scandal, the adcampaign has raised hackles in some quarters over the use ofsuch tactics but nevertheless has also sparked a public debateabout the merits of investing in untried technology.
"We don't use such methods in Denmark," said one defencelawmaker who is involved in the decisionmaking process.
"Boeing ought to be careful not to be hit by its ownboomerang, if we get disgusted by the company. Right now, Boeingis close to giving me this feeling," the person said in reactionto the ad campaign.
However, in the wider public - more accustomed to ads fororganic cheese than fighter jets - the discussion quicklyshifted from what type of plane should be purchased to whetherDenmark should buy new warplanes at all.
Boeing has defended its advertising.
"The informational campaign was created firmly out ofrespect and understanding of the documented Danish acquisitionprocess which has a phase of public debate," Tom Bell, the topsales executive for Boeing's defence business, told Reuters.
And Boeing executives are publicly bullish about theirchances of winning the Danish order for up to 30 jets, butprivately concede winning Denmark would be a long shot, makingthe ad campaign seem like a last-ditch effort.
"Winning Denmark is absolutely vital for Boeing which haslimited firm export orders left for the (Super Hornet) and isdesperate for business," said Francis Tusa, Editor of DefenceAnalysis.
Outside the traditional major arms purchasers in the Gulf,nations currently shopping for fighters include Belgium,Indonesia and Malaysia, while eastern Europe is looking forsecondhand aircraft..
The United States is poised to approve two long-delayedsales of Boeing fighter sales to the Gulf including 28 SuperHornets worth $3 billion for Kuwait.
A separate but unfunded U.S. Navy requirement calls foranother 12 jets, but Boeing remains keen to win new exportorders to shore up future production for its fighters in StLouis.
For Lockheed Martin, losing the Danish order could dentmarket confidence in the F-35.
Denmark is one of eight original partners that helped funddevelopment of the F-35 and flies Lockheed F-16 jets alongsideBelgium, Norway and the Netherlands. Norway and the Netherlandshave ordered F-35s and Belgium has expressed interest.
However, the $379 billion F-35 program has been plagued withcost overruns and delays, although U.S. officials say theprogram has met its cost and schedule targets since a majorrestructuring in 2010, and acquisition costs are now finallycoming down.
Software issues and problems with a complex logistics systemstill pose challenges, according to a U.S. congressional reportreleased this month, which said the lack of a back-up systemcould potentially ground the U.S. F-35 fleet.
Lockheed officials say they are confident that the new jet'ssuperior data-processing and "fusing" capabilities, coupled withits ability to evade radar, will ultimately prevail over theolder-generation Super Hornets.
A third contender in Denmark, the Eurofighter Typhoon madeby Airbus Group, BAE Systems and Finmeccanica, officially remains on the shortlist, but Danishgovernment sources say it is no longer being considered.
Eurofighter said it was confident of winning more ordersafter a recent deal for 28 planes in Kuwait. (Additional reporting by Tim Hepher in Paris, Andrea Shalal inWashington; Editing by Greg Mahlich)