EXCLUSIVE: GE, Rolls F-35 engine deliveries said delayed

By Andrea Shalal-Esa

WASHINGTON (Reuters) - Deliveries of an alternate F-35 fighter engine being built by General Electric Co (GE.N) and Rolls-Royce Group PLC (RR.L) will be delayed by one year, a source familiar with the program said on Tuesday.

That may be bad news for the team, which is fighting to maintain funding for the second engine for the $300 billion Lockheed Martin Corp (LMT.N) F-35 fighter despite opposition by the White House and Pentagon. In October, the GE-Rolls team was forced to halt testing of its developmental engine until January 2010 when a loose nut damaged turbine blades.

"The entire F136 delivery plan has slipped a year," the source, who was not authorized to speak on the record, told Reuters.

The Pentagon's F-35 program office referred all queries to Pentagon spokesman Cheryl Irwin, who said she was unable to confirm a year-long delay with the engine but said no decision had been made on whether to buy the first batch.

"That decision will be based on the design maturity of the engine, the availability of full procurement funding in the FY2010 appropriations, and the status of FY2009 advance procurement funding, currently on withhold," she said in an email.

General Electric spokesman Rick Kennedy said the team had not been informed of a one-year delay, but said the Pentagon's failure to release $35 million in long-lead funding from the fiscal 2009, that ended September 30, could affect the delivery of four low-rate production engines now scheduled for fiscal 2012.

"That funding hasn't been released, and that is an issue," Kennedy said. "It affects our ability to scale up for a production program, including tooling and everything else."

The GE-Rolls engine program, initiated by Congress to ensure competition, has been on schedule and budget thus far.