sees next U.S. F-35 fighter contract early this summer
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[June 10, 2014]
By Andrea Shalal
WASHINGTON (Reuters) - Lockheed Martin
Corp expects to sign a contract with the U.S. government early this
summer for 43 more F-35 fighter jets, but the deal is unlikely to match
price reductions seen on the last few contracts, a top company executive
Chief Financial Officer Bruce Tanner said the company had driven
the price of the jets lower by 4 percent to 5 percent in each of the
previous three contracts, but savings of that magnitude were
unlikely on the eighth batch of jets, given the lack of large
quantity increases in the order.
"I'm not sure we will get to that level, but I do expect we'll have
a reduction from the previous lot on an aircraft-to-aircraft basis,"
Tanner told Reuters in an interview during the company's annual
Lockheed submitted a proposal for the next lot of F-35 jets in
December. The company finalized a contract valued at $7.8 billion in
September for 71 more F-35s, including a sixth batch of 36 jets, and
a seventh batch of 35 aircraft.
In April, the Pentagon's F-35 program chief, Air Force Lieutenant
General Chris Bogdan, said he hoped to sign contracts with both
Lockheed and engine maker Pratt & Whitney, a unit of United
Technologies Corp, by the end of May.
Orlando Carvalho, executive vice president of Lockheed's aeronautics
division, said the two sides could sign a deal before the end of
June, ahead of the jet's international premier at two air shows in
Britain in July.
"I think we're closing on a final settlement, but we still have a
little ways to go. Let's hope by the end of the month we have it
done," he told Reuters.
Lorraine Martin, Lockheed's F-35 program manager, told reporters the
two sides were now "trading really productive offers to get to
F-35 program spokesman Joe DellaVedova declined to comment on the
timing of a possible contract, or the expected cost reductions. He
said negotiations were continuing with both Lockheed and Pratt.
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Carvalho said Lockheed was hopeful that Canada would select the F-35
to replace its aging fleet of CF-18 fighters.
Reuters last week reported that Canada was poised to buy 65 F-35
fighter jets after an 18-month review concluded Ottawa should skip a
fresh competition and proceed with the C$9 billion deal to buy
One source familiar with the process said an independent team of
evaluators was expected to discuss the Canadian government's process
and methodology at a news conference on Wednesday, but would not
give its own recommendation. A second source said no public report
would be released, if the event took place.
Carvalho said Lockheed would finish development by the end of the
year of the 2B software needed for the Marine Corps version of the
jet, which is due to start combat operations in mid-2015.
(Additional reporting by Randall Palmer in Ottawa Editing by David
Gregorio and Mohammad Zargham)
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