Exclusive: Pentagon nears deal on F-35 jet worth about $30 billion – sources


A Lockheed Martin F-35 aircraft is seen at the ILA air show in Berlin, Germany April 25, 2018. REUTERS/Axel Schmidt

Join now for FREE unlimited access to Reuters.com

Register

WASHINGTON, July 18 (Reuters) – The U.S. Department of Defense is set to strike a deal with Lockheed Martin Corp (LMT.N) for about 375 F-35 fighter jets over three years, three sources said on Monday, in a context of expectation of a price increase. for the most common version of the jet due to lower quantities and inflation.

The first F-35A cost $221 million when it rolled off the production line in 2007. Since then, production quantities and craftsmanship have increased, driving the price of the fifth-generation stealth fighter down to $79 million as it gained buyers.

Talks have stalled in recent weeks over data rights, two people familiar with the talks said. But a midday Monday meeting in Washington could result in a “hands-on” decision on both a price range and quantity, the people said. If a deal is reached, finalized pricing wouldn’t be locked in for several weeks or even months, but an ultimate total value would be in the range of around $30 billion.

Join now for FREE unlimited access to Reuters.com

Register

The handshake deal would come as the aviation industry rallied for the return of the Farnborough Airshow, aiming for a show of confidence after the devastation of COVID-19, even though the only records likely to be broken during the event in the south east of England are for sweltering temperatures.

Amid the pandemic, Lockheed began to hint that the price of the jet could rise as economies of scale waned and supply chains stumbled. A pre-pandemic forecast for this three-year purchase showed around 485 jets could be included, but the 22% volume drop would certainly impact the overall cost of the F-35A, the most common version of the jet. . Read more

The F-35 is available in three configurations, Model A for the US Air Force and US allies; an F-35B model, which can handle short takeoffs and vertical landings; and F-35C jets for carrier landings.

A previous three-year “block purchase” from the Pentagon, signed in 2019, was for 478 F-35 fighter jets, allowing Lockheed to buy larger quantities of components to cut costs by around 8%, to 34. billions of dollars, compared to the negotiation of annual contracts.

Lockheed executives have said any country with an F-16 jet, the predecessor to the F-35, is a potential customer.

The F-35 has had several recent successes in fighter jet competitions, including in Finland, Switzerland and Germany. Potential customers include Greece and the Czech Republic. Read more

Foreign military sales like those of the F-35 are considered government-to-government deals where the Pentagon acts as an intermediary between the defense contractor and a foreign government.

The F-35 jet program accounts for about 27% of Lockheed’s revenue.

Join now for FREE unlimited access to Reuters.com

Register

Reporting by Mike Stone in Washington; Editing by Mark Porter, Leslie Adler and Jonathan Oatis

Our standards: The Thomson Reuters Trust Principles.

Previous Marine goes from Ursuline to Vietnam | News, Sports, Jobs
Next Aircraft Parts Manufacturing, Repair and Maintenance Market – An In-Depth Study by Key Players: United Technologies, General Electric, Boeing, Safran, Airbus