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Lockheed agrees to cut price for new F-35 fighter jets, says Pentagon
THE Pentagon announced on Friday a US$11.5 billion contract for 141 F-35 fighter jets from Lockheed Martin Corp, the biggest batch yet, lowering the price for the most common version of the stealthy jet by 5.4 per cent to US$89.2 million.
A preliminary deal was struck in July, and reported first by Reuters, clearing the way for a larger multi-year purchase that aims to bring the cost per jet down to US$80 million by 2020. Most of the jets are for the US military, and others are for a number of allied countries.
Reducing the cost of the world's most expensive defence programme is crucial to securing orders in the US and more from abroad.
Lockheed is the No. 1 US defence contractor. "Driving down cost is critical to the success of this programme," said Vice-Admiral Mat Winter, head of the Pentagon's F-35 office.
The deal removes a roadblock from negotiations for a multi-year deal for the fighters that is expected to consist of three tranches over fiscal years 2018-2020.
President Donald Trump and other US officials have criticised the F-35 programme for delays and cost overruns, but the price per jet has declined as production increased. The price of the last batch of F-35A's in 2017 cost 7 per cent less than the previous jet order.
Greg Ulmer, head of the F-35 programme at Lockheed, said the Bethesda, Maryland-based company expects to cut the cost of the F-35A to US$80 million by 2020.
In addition, negotiations were ongoing for a multi-year deal that was said to be worth more than US$37 billion, and encompassing a record 440 F-35 fighter jets.
Negotiations for this 11th batch of jets were extended because Trump-appointed Pentagon leadership drilled deep into the programme to understand its costs, prolonging negotiations for the multi-year "block buy", people familiar with the talks have said.
Lockheed is aiming to deliver 91 jets in 2018 and hopes to nearly triple annual production to more than 160 jets in 2023. REUTERS