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Lockheed, Pentagon reach $34B deal for F-35 production

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The F-35 Joint Program Office and Lockheed Martin (NYSE: LMT) finalized a $34 billion agreement for the production and delivery of 478 F-35s including 149 for Lot 12, 160 for Lot 13 and 169 for Lot 14, the Defense Department and Lockheed announced on Oct. 29.

The deal, which followed many attempts at lowering the price of the high-tech aircraft, will find the F-35 now priced at below $80 million in many cases. The F-35A unit price, including aircraft and engine, is now below $80 million in both Lot 13 and Lot 14 of the contract. The F-35A unit cost represents an estimated overall 12.8 percent reduction from Lot 11 costs for the conventional landing variant, and an average of 12.7 percent savings across all three variants from Lot 11 to 14.

“Driving down cost is critical to the success of this program. I am excited that the F-35 Joint Program Office and Lockheed Martin have agreed on this landmark three-lot deal. This agreement achieves an average 12.7 percent cost reduction across all three variants and gets us below $80 million for a USAF F-35A by Lot 13 – one lot earlier than planned,” said Air Force Lt. Gen. Eric Fick, F-35 Program Executive Officer. “This $34 billion agreement is a truly historic milestone for the F-35 Enterprise.”

The agreement includes 291 aircraft for the U.S. Services, 127 for F-35 International Partners, and 60 for F-35 Foreign Military Sales customers. the lowest aircraft price during the history of the Program. This contract includes all U.S., International Partners and Foreign Military Sales aircraft in Lots 12, 13 and 14. The advanced fifth-generation fighter jets are manufactured at Lockheed’s Fort Worth assembly plant, which employs more than 14,000 workers.

The F-35 platform is a multinational project that is also being sold to allied nations and foreign military sales customers.

“With smart acquisition strategies, strong government-industry partnership and a relentless focus on quality and cost reduction, the F-35 Enterprise has successfully reduced procurement costs of the 5th Generation F-35 to equal or less than 4th Generation legacy aircraft,” said Greg Ulmer, Lockheed Martin, F-35 Program vice president and general manager. “With the F-35A unit cost now below $80 million in Lot 13, we were able to exceed our long-standing cost reduction commitment one year earlier than planned.”

The F-35 now has more than 450 aircraft operating from 19 bases around the globe and more than 910 pilots and 8,350 maintainers have been trained, and the F-35 fleet has surpassed more than 220,000 cumulative flight hours. Eight nations have F-35s operating from a base on their home soil and seven Services have declared Initial Operating Capability.

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