FARNBOROUGH, ENGLAND: The United States has struck a preliminary deal tobuy F-35 jets from Lockheed Martin worth about $13 billion, clearing theway for a larger multi-year purchase that aims to bring the cost per jetdown to $80 million by 2020, sources said.
The deal for 141 F-35s lowers the price of the F-35A, the most commonversion of the stealthy fighter jet, to about $89 million, down around 6percent from $94.3 million in the last deal struck in February 2017, thesources familiar with the talks said.
Bringing down the cost of the world’s most expensive defence programme iscrucial to securing more orders, both in the United States and abroad.
President Donald Trump and other U.S. officials have criticised the F-35programme for delays and cost overruns, but the price per jet has steadilydeclined in recent years as production increased.
The current “handshake” deal will be solidified along with pricing andother terms in a contract that will be announced in the coming weeks, thesources said, on condition of anonymity because the talks were private.
The agreement with the U.S. Department of Defense removes a crucial roadblock from the ongoing negotiations for a multi-year deal for the fightersthat is expected to consist of three tranches over fiscal years 2018-2020.
The Pentagon and Lockheed Martin “have made progress and are in the finalstages of negotiation,” the Pentagon’s head of acquisitions Ellen Lord saidin a statement, adding the two sides had reached “a handshake agreementwhich symbolises the Department of Defense’s commitment to equip” U.S andallied forces, while giving “great value” to the U.S. taxpayer.
Last summer, Reuters reported that F-35 customers including Australia,Denmark, Israel, Italy, Japan, the Netherlands, Norway, Turkey, SouthKorea, Britain and the United States had aimed to procure 135 or more jetsin fiscal year 2018 for delivery in 2020 for about $88 million per jet.
In addition, negotiations were ongoing for the multi-year U.S. deal thatwas said to be worth more than $37 billion, and encompassing a record 440F-35 fighter jets.
But negotiations for this 11th batch of jets extended because new Pentagonleaders drilled deep into the programme to understand it and its costs,prolonging negotiations for the multi-year “block buy,” the sources said.
On Sunday, a Lockheed Martin representative said the handshake agreement onthe production contract for the 11th lot of F-35 aircraft was in place, butthe total value and cost per variant would be released when the contractwas finalised.
The F-35 comes in 3 variants: the F-35A conventional take-off and landingmodel; the F-35B, a short take-off/vertical landing version; and the F-35C,used aboard aircraft carriers.
The F-35 programme is aiming to grow the fleet to more than 3,000 jets andbring the unit price of the F-35A closer to $80 million in 2020 throughefficiencies gained by ordering in larger quantifies.
The jet had production problems in 2017, but Lockheed still hit its 2017target to deliver 66 to the United States and its allies.
Lockheed is aiming to deliver 91 jets in 2018 and the Bethesda,Maryland-based weapons maker hopes to nearly triple annual production tomore than 160 jets in 2023.
Despite the challenges the programme has faced, the jet completed itsflight testing in April. In May, Israel said it had been the first countryto use the fighter in combat.
New international customers are also possible. In February, the U.S. StateDepartment approved the possible sale of 34 F-35s to Belgium for as much as$6.53 billion. Belgum is due to make a decision on a new fighter later thisyear.