Lockheed, Pentagon ink $4.7 billion deal for eighth batch of F-35 fighters

[November 22, 2014]  WASHINGTON (Reuters) - The Pentagon said on Friday it had awarded Lockheed Martin Corp <LMT.N> a contract valued at $4.7 billion for an eighth batch of F-35 fighter jets that lowered the average price per jet by 3.5 percent from the last contract, and 57 percent from the first batch.

The Pentagon's F-35 program office said the deal includes 29 jets for the United States and 14 for five other countries: Israel, Japan, Norway, Britain and Italy.

Once production of those jets is completed, more than 200 F-35s will be in operation by eight countries, according to the office that runs the $399 billion F-35 program for the Pentagon.

The Pentagon has signed a separate contract valued at $1.05 billion for an eighth batch of engines built by Pratt & Whitney, a unit of United Technologies Corp <UTX.N>, to power the jets. Pratt last month said the contract would lower the cost of the engines between 3.5 percent to 4.5 percent.

The program office said the new contract reduced the cost of the A-model airframe built for the Air Force, without the engine, to $94.8 million.

The cost of the F-35 B-model, which can take off from shorter runways and lands like a helicopter, would be $102 million, without an engine, while the Navy's C-model or carrier variant would be $115.7 million, it said.

The Pentagon does not provide detailed cost breakdowns for Pratt's F135 engine, given the company's concerns about proprietary data, but U.S. officials have said they expect the cost of the aircraft, with an engine, to drop to about $80 million to $85 million by 2019.

Lockheed's F-35 program manager, Lorraine Martin, said the latest contract showed the company was making steady progress in reducing the cost of the most advanced U.S. warplane.

Lockheed and its key subcontractors, Northrop Grumman Corp <NOC.N> and BAE Systems Plc <BAES.L>, as well as Pratt, are all investing in various measures aimed at simplifying production of the jets and reducing the cost to build and operate them.

But the biggest driver in cutting the cost of the planes is the number of jets ordered in any given year.

Lockheed had hoped to finalize orders for two dozen more F-35 jets for Israel this year or early next, but Israel may halve that order to around 10 to 15 jets, a cabinet minister told Reuters earlier this week.

(Reporting by Andrea Shalal, editing by Mohammad Zargham and David Gregorio)

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