Thread by @CorporalFrisk

Okay, time for another thread on everyone's favourite topic - the real cost of #F35 and can #Finland afford it in #HXhanke. The reason is that the Norwegian budget and Swiss acquisition costs are out, and they have caused quite a stir. 1/x #turpo=#säkpol

The Swiss number caused quite a stir, including talk about the aircraft having gone up 20% in cost since the decision was made. I don't quite get those figures, but an increase of 17% (5.07 Bn CHF to 5.95 Bn CHF). 2/x vbs.admin.ch/content/vbs-in…

A key detail here is that the exchange rate of USD to CHF has grown somewhat worse for the Swiss since February when the original figures came in, so I get an increase in USD of 13%. Still bad, but not quite on par with the dreaded 20% figure. 3/x

Of course, exchange rate risk is very real when you trade in different currencies, and has to be included in any budget as it is real, but since it isn't caused by shady negotiation tactics of LM I though it worth pointing out. 4/x

(in HX I believe only #Rafale is traded in Euros, and as such not privy to exchange rate risks. F-35 and Super Hornet are most likely USD, Gripen with high reliance on US systems is also rather vulnerable to EUR-USD fluctuations, and Eurofighter is just a mess in this field) 5/x

A key detail is the lack of weapons in the Swiss offer. The Swiss are rather transparent, and the weapons package is worth 107 M CHF (102.7 MEUR). At the same time, Saab has disclosed their HX offer has 1.7+ Bn EUR worth of weapons. 6/x corporalfrisk.com/2021/11/13/one…

...and that is straight acquisition cost of the munitions. Even if the F-35 would make do with cheaper US weapons and simpler ones due to stealth allowing to get closer, the LM offer to Finland IMO can be assumed to include at least 1 Bn EUR of weapons. 7/x

So if we throw out the weapons, inflation adjustment, and technical risks (which the Swiss class as a low number thanks to the large user base), the acquisition cost for 36 F-35A is 5.84 Bn CHF, giving an average unit cost of 155 MEUR per aircraft. 8/x

If we take that times 64 and add back in 1 Bn EUR of weapons, we reach 10.97 Bn EUR - without any room for inflation, technical risks, and with a Swiss-size spares package (which I highly doubt is large enough to satisfy FinAF). 9/x

Granted, it doesn't necessarily scale that way, but as we all remember the Finnish acquisition budget is roughly 9.3 Bn EUR, and that makes a Swiss deal with minimum Finnish weapons 18% above the Finnish acquisition budget. 10/x

The LCC for the Swiss is calculated at 15.5 Bn CHF over 30 years, a bit of division and multiplication later and we are looking at 26.45 Bn EUR for 64 aircraft/30 years. Again, this likely doesn't scale linearly, but it's a solid 30% above the Finnish budgeted 20 Bn EUR LCC. 11/x

Coffe and biathlon-watching break, and then we'll see what our Norwegian friends are up to. 12/x

Okay, back to the Norwegians: 13/x

The government publishes the latest confirmed numbers for the project on their homepage. Thank you very much, appreciate the transparency! 🇳🇴 14/x regjeringen.no/no/tema/forsva…

(Assume these "latest figures" include the reported 5.14 Bn NOK upgrade to Block 4, but be aware that is also a number floating around) 15/x regjeringen.no/contentassets/…

The acquisition program for 52 F-35A is set at 71.5 Bn NOK and a 268.1 Bn NOK LCC for 30 years, *both in 2017 price levels*. Using consumer price index (Konsumprisindeksen) we land at 76.4 Bn NOK and 297.6 Bn NOK respectively in 2021 prices. 16/x

(You can argue that CPI is the wrong constant to use, but it's easily available and more or less in line with the general cost level which impact the state's budget, so I'd argue that's not the greatest uncertainty here) 17/x

That gives 7.7 Bn EUR in acquisition costs and 28.9 Bn EUR in LCC, which again dividing and multiplying gives 9.5 Bn EUR for 64 aircraft and 35.5 Bn EUR in LCC. The acquisition cost in other words fit more or less within the Finnish budget, but the LCC is 77.5% over! 18/x

It should be noted that there's a ton of uncertainties here, including how the LCC are calculated, and how the spares and weapons stocks differ, what kind of training arrangements, conscripts vs. paid personnel, the very real dangers of extrapolating, and so forth. 19/x

*However*, if Finland has managed to get an LCC that is 44% smaller than what the Norwegians are looking at, either the FDF are geniuses, or the Norwegians shouldn't be allowed to any budget more important than the company's coffee jar. 20/x

To be honest, I don't think the Finnish Air Force is able to shave that kind of percentages from the budget. The end result, even with all uncertainties, is that neither the Swiss nor the Norwegian numbers indicate that Finland could afford a 64 aircraft F-35A fleet. 21/x

Feel free to point out any numbers that seem off. I've calculated between four different currencies with three different exchange rates and two different price levels, so there's certainly a possibility that some numbers are off somewhere 😅 22/22

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