Pentagon, Lockheed Martin Make Initial Agreement to Build 375 F-35s

The U.S. Department of Defense agreed with Lockheed Martin to build about 375 F-35 fighter jets over three years. The price of the aircraft is expected to increase due to inflation and slower production. The Pentagon announced it was pleased with the agreement for the next F-35 purchase that would include 375 aircraft. The deal is expected to be worth around $30 billion.

The handshake agreement came as the aviation industry is set for the return of the Farnborough Airshow after the pandemic.

This is considered as the initial agreement for finalizing contract pricing and award. It will unlikely to be reached in less than several weeks or months. The final value of the deal is still uncertain.

The first F-35A, the most common version of the aircraft, was produced in 2007 and cost $221 million. Since then, production quantities and know how have increased and the price of the stealth fighter fall to $79 million each.

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

Lockheed had begun to forecast that the price of the jet could rise as economies of scale diminished and supply chains stumbled.

Last week U.S. data showed inflation had accelerated to an annual rate of 9.1% in June.

The Pentagon’s previous three-year “block buy,” signed in 2019, was for 478 F-35 fighter jets, allowing Lockheed to buy larger quantities of components to reduce costs by about 8%, to $34 billion, versus 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.

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