Pentagon to build 375 F-35 fighter jets over next three years

Deal between US Defence Department and Lockheed Martin is worth about $30bn

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The US Department of Defence agreed with Lockheed Martin Corp to build about 375 F-35 fighter jets over three years, the two parties said.

The agreement came amid expectations that the price of the most common version of the aircraft would increase because of inflation and slower production.

“We are pleased to announce that the department and Lockheed Martin reached a handshake agreement for the next F-35 lot buy on a basis of 375 aircraft,” said William LaPlante, the Pentagon's chief weapons buyer.

Earlier on Monday, Reuters reported the deal, worth about $30 billion, was nearing an agreement.

The agreement came as the aviation industry gathered for the return of the Farnborough Airshow, aiming for a display of confidence after the Covid-19 pandemic.

But the only records likely to be broken at the event in south-east England are for sweltering temperatures.

The "handshake" agreement is a starting point for finalising contract prices and award, which will probably not be locked in for weeks, if not months.

So the ultimate value of the deal, and the price for each jet variant, is still uncertain.

The most common version is the F-35A, which flies conventionally from runways.

The first aircraft of that version cost $221 million when it came off the production line in 2007.

Since then, production quantities and know-how have increased, helping the price of the stealthy fifth-generation fighter to fall to $79m each as it has gained buyers.

The Pentagon said the aircraft quantity in this agreement might change based on any “adjustments made by the US Congress in the Fiscal Year 2023 budget and any orders requested by international partners".

Lockheed said that “in the midst of continued Covid-19 impacts and decreased F-35 quantities, the F-35 enterprise was able to achieve a cost per jet lower than record-breaking inflation trends”.

Last week US data showed inflation had accelerated to an annual rate of 9.1 per cent in June.

Amid the pandemic, Lockheed began to foreshadow that the price of the jet could rise as economies of scale diminished and supply chains were blocked.

An earlier Pentagon three-year “block buy", signed in 2019, was for 478 F-35 fighter jets, allowing Lockheed to buy larger amounts of parts to reduce costs by about 8 per cent, to $34bn, compared with negotiating annual contracts.

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

The UAE in December announced it was suspending discussions with the US government to acquire F-35 fighter jets over “sovereignty operational restrictions".

Updated: July 19, 2022, 7:55 PM