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Bulk buy lowers F-35 costs to $85 million each

Started by quiller, June 18, 2017, 11:31:29 AM

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In a Reuters exclusive, here's a look at how the U.S. is only part of the multinational buying group contracting for various incarnations of the F-35. It's a $37-billion-plus deal put together by Lockheed and 11 nations in all are involved, for a total of 440 of these stealth aircraft.

QuoteLast week, representatives from 11 F-35 customer nations met in Baltimore, Maryland to discuss terms and toured a Northrop Grumman Corp (NOC.N) facility in Maryland that provides equipment for the jet. Those nations included Australia, Denmark, Israel, Italy, Japan, the Netherlands, Norway, Turkey, South Korea, Britain and the United States.

The memorandum of understanding being negotiated between Lockheed and the customers aims to procure 135 or more jets in fiscal year 2018 for delivery in 2020 for about $88 million per jet, the people said.

In the subsequent fiscal years, 2019 and 2020, procurement would ramp up to 150 or more jets per year.

The average price in 2019 could be $85 million for the F-35 "A" variant and could drop below $80 million in 2020, the people said. That would mark the lowest price ever paid for an F-35, making this deal an important step in reducing the overall cost of each jet.

The F-35 has been widely criticized for being too expensive, including by U.S. President Donald Trump and other U.S. officials who have criticized the Pentagon's most expensive program for delays and cost overruns. Recently, a quarter of the operating F-35 fleet was grounded until further notice because of irregularities in the pilots' oxygen supplies.