By David Ljunggren
OTTAWA (Reuters) - Canada is scrapping a plan to buy 18 Boeing Co (N:BA) Super Hornet fighter jets amid a deepening dispute with the U.S. aerospace company, three sources familiar with the matter said on Tuesday.
Instead, the Liberal government will announce next week it intends to acquire a used fleet of older Australia F-18 jets, the same kind of plane Canada currently operates, said the sources, who asked not to be identified because of the sensitivity of the situation.
The move underlines Ottawa's anger at a decision by Boeing to launch a trade challenge against Canadian planemaker Bombardier Inc (TO:BBDb), which the U.S. giant accuses of dumping airliners on the domestic American market.
It also casts into question the future of Boeing's military sales in Canada. Boeing says its commercial and defense operations in Canada support more than 17,000 Canadian jobs.
Canada and Mexico are currently locked into increasingly acrimonious negotiations with the United States over the NAFTA trade pact, which President Donald Trump says has not done enough to protect U.S. jobs.
The Liberal Party of Prime Minister Justin Trudeau initially said in late 2016 it wanted the Boeing jets as a stopgap measure until it could launch a competition for a permanent fleet to replace Canada's ageing CF-18 jets.
But as relations with Boeing deteriorated, Ottawa slammed the firm for not acting as a trusted partner and began looking at the Australian jets.
Two of the sources said Australian military officials had been in Ottawa late last month for talks.
One source said that by buying the Australian fleet, Canada would save money as well as avoid the need to train its pilots on a new aircraft or spend money on a new supply chain.
Officials had previously said that if the purchase went ahead, some of the Australian aircraft would be used for spare parts.
The offices of Public Works Minister Carla Qualtrough and Defence Minister Harjit Sajjan, who share responsibility for military procurement, both declined to comment.
Boeing declined to comment. The Australian mission in Ottawa was not immediately available for comment.
Canada is due to officially announce the requirements for its new fighter fleet in early 2019, kicking off an open competition.
One potential contender is Lockheed Martin Corp's (N:LMT) F-35 fighter, which Trudeau initially said he would not buy because it was too expensive. The government has since softened its line, saying the plane would be allowed to compete.