Lockheed Martin to sell 90 new F-35 fighter jets to DoD for $8.5 bn
04 Feb 2017
Defence giant Lockheed Martin had agreed to sell 90 new F-35 fighter jets to the US Defence Department for $8.5 billion, cutting $700 million on the last batch of the aircraft to be delivered.
The company had credited president Donald Trump for helping to "accelerate negotiations" and "drive down the price" of what is already the most expensive weapons programme in history.
The cost of the F-35 Joint Strike Fighter programme, had, in recent weeks, drawn the attention of Trump. He called for a review of whether a modified version of the older F/A-18 aircraft could replace the Navy's costly F-35 variant. (See: Trump slams F-35 Joint Strike Fighter cost escalation) Lockheed Martin CEO Marillyn Hewson gave then-president-elect Trump her "personal commitment" to cut the cost of the stealth F-35 fighter jet after Trump posted a tweet criticising the programme and newly confirmed defence secretary James Mattis ordered the Pentagon to review the $400-billion programme last week.
When it becomes official, the deal in principle would mark the first time that costs for any of the three versions of the fifth generation fighter jet would have been reduced below $100 million per plane.
For the new batch of F-35s, the Air Force's A version would cost $94.6 million, the B version flown by the Marines would cost $122.8 million, and the Navy's C version would cost $121.8 million.
Meanwhile, experts said, yesterday's agreement value at $8.7 billion, by some analysts would increase the pressure on the defence giant to continue cutting the F-35 Joint Strike Fighter's production costs and it also risked margin erosion .
CNBC.com reported Morningstar analyst Chris Higgins, "I'd say it's a pretty aggressive price reductions. The key is Lockheed needs to reduce the costs at a faster rate than they are cutting the price."
"We're pleased to have reached an agreement with the U.S. Department of Defence for the next 90 F-35 aircraft," Lockheed said in a statement. "The agreement represents $728 million in savings and a nearly 8 percent reduction in price over our last contract for the air vehicle delivered by Lockheed Martin and our industry partners."
