PARIS— Dassault Aviation SA said on Thursday it is ready to rebid for a multibillion-dollar Canadian combat-aircraft contract if Ottawa backs out of a plan to buy U.S.-made F-35 combat aircraft to replace the country's aging fleet of F-18 fighter jets.

The Canadian government needs to start replacing the F-18s by 2017 which would imply an initial order by this year.

However, the government is reviewing its decision to buy F-35s, made by Lockheed Martin Corp , because of escalating costs, and could decide to reopen the competition for some 65 aircraft.

Possible alternatives include Dassault's Rafale and the Eurofighter Typhoon that is made by a consortium including Airbus Group and BAE Systems PLC of the U.K. as well as JAS 39 Gripen made by Sweden's Saab AB.

Growing pressure on military budgets in developed countries is squeezing the business of defense contractors like Dassault, which also makes Falcon business jets, particularly for big-ticket items like combat jets. At the same time, the squeeze is pushing U.S. and European defense companies into export markets, intensifying competition for new business there.