Forty years on from first flight of the YF-16 prototype, the Lockheed Martin F-16 Fighting Falcon is enjoying an unlikely – albeit fiscally challenging – renaissance.

Lockheed’s assembly line in Fort Worth, Texas, was once expected to close in 2009, but today has a backlog running through the third quarter of 2017 and fair prospects for more orders on the horizon.

A cottage industry has formed to upgrade and strengthen F-16s once scheduled for retirement, challenging the original manufacturer’s virtual monopoly on the aircraft.

Moreover, the F-16’s longevity will be celebrated in July at the Royal International Air Tattoo in the UK, which has invited all of the type’s operators, who now number 28, with two more added in the past couple of years.

But the F-16’s founder and still-largest operator – the US Air Force – raised doubts about the type’s future earlier this year.

A $2.5 billion avionics and defensive systems upgrade – dubbed the F-16 combat avionics programmed extension suite (CAPES) – was dropped from the Obama administration’s fiscal year 2015 budget proposal. Cancelling the CAPES upgrades, including an improved, electronically scanned Northrop Grumman radar to hunt for surface-to-air missiles, raises questions about how the USAF can operate about 300-350 F-16s on air combat missions beyond 2025, as currently planned.

Lockheed officials, however, remain confident that CAPES is only delayed – not eliminated.

“The requirement for a CAPES upgrade for the US Air Force remains,” says Bill McHenry, Lockheed’s head of F-16 business development.

McHenry says the sequestration-imposed budget crisis could drive the USAF to rely more on an upgrade programme already funded for Taiwan’s fleet of F-16s.

“They are looking at what options they might have; for example, leveraging to a higher degree what’s going on in Taiwan and following what they are doing,” McHenry says.

The F-16 needs other critical upgrades besides a new radar and avionics. The USAF fleet is nearing the end of its 8,000h service life. A service life extension programme could add 10-12 years by increasing the number of service life hours to either 10,000 or 12,000 on each airframe. Lockheed is currently subjecting an F-16 Block 30 to three lifecycles of fatigue tests, which will determine the extent of the upgrades necessary for the programme.

The service life extension programme remains funded, which gives Lockheed officials still more hope that the USAF will come back to the CAPES programme.

“If you’re going to extend the service life, maybe you ought to do some avionics upgrades, too,” McHenry says.

Additional reporting by Jon Hemmerdinger in Fort Worth