(Reuters) -- The U.S. Air Force said Thursday it plans a $2.8 billion upgrade of about 350 of its aging F-16 multi-role fighter planes to help offset slower purchases of the next-generation F-35 Joint Strike Fighter.

The work, running into the 2020s, will extend the service life of select F-16 airframes. Other upgrades include advanced radar, sensors, cockpit display, electronic warfare and communications capabilities, the service said.

We have worked through the implications of the delays in the F-35 Joint Strike Fighter program, Air Force Secretary Michael Donley told the Air Force Association earlier in the day. And we have made a further commitment this year to modernize about 350 F-16s in the fleet going forward.

Ann Stefanek, an Air Force spokeswoman, said the upgraded F-16s would receive active, electronically scanned array (AESA) radar. Northrop Grumman Corp and Raytheon Co build rival systems and are likely to compete for the work.

Overall, the program will run into the 2020s and have an estimated total cost of $2.8 billion, Stefanek said in an emailed reply to queries from Reuters about Donley's remarks.

The Air Force will pick the best of the fleet to undergo the modernization for later-model Block 50 and some Block 40 F-16s, Stefanek said. The program is scalable based on the service's fighter needs, she added.

The Air Force has just over 1,000 F-16s in its current inventory, of which about 640 are Block 40/50s, distributed among active, Guard and Reserve components. None has yet undergone the structural service life extension program or capability upgrades now planned, the service said.

Lockheed Martin Corp builds both the F-16 and three versions of the radar-evading F-35, which is in low-rate initial production in a program co-financed by the United States and eight partner nations.

More than 4,450 F-16s have been delivered to 26 nations since the program started more than 30 years ago, including 54 follow-on buys by 15 customers, according to Lockheed, the Pentagon's No. 1 supplier by sales.

The U.S. F-16 modernization could point the way for modernization of many such F-16 fleets worldwide.

The U.S. Defense Department, in its third F-35 program restructuring in as many years, is set to trim 179 Joint Strike Fighter planes from production between 2013 and 2017. This would pare the number built for the U.S. military to 244 from 423 during this time.

The F-35 slowdown will help satisfy a congressional mandate to cut $479 billion from the Pentagon's budget over 10 years as part of a U.S. deficit-reduction push.

The service will focus on common configurations for its key aircraft to maximize operational flexibility and minimize sustainment costs, Donley told the Air Force Association audience.

Bill McHenry, director of business development for Lockheed Martin's F-16 program, said Block 40 and Block 50 models were originally projected to have 8,000 hours of service life, depending on loads carried and other factors.

But they were exceeding original expectations and may be capable of as much as 12,000 hours of service, for instance with new bulkheads and other structural changes typically costing less than $1 million per plane, he said in a telephone interview.

The United States is about to pit Raytheon Co against Northrop Grumman to supply the AESA radar for a potential $5.3 billion retrofit of Taiwan's 145 F-16A/B Block 20 aircraft. The Taiwan deal also includes 128 Joint Helmet Mounted Cueing systems, upgraded electronic countermeasure pods plus a range of munitions, parts and logistical support.

McHenry said the Taiwan upgrade could benefit the United States and other F-16 customers to the extent it would shed light on common integration issues.

Clearly, whatever integration is done would be able to be applied elsewhere, he said. One of the key objectives among F-16 users is to prepare to be interoperable with the F-35, for instance with increased computer processing power, seamless communications and greater sensor capability, McHenry said.

(Reporting by Jim Wolf; Editing by Dave Zimmerman and Steve Orlofsky)

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