Pentagon, Lockheed Reach Handshake Agreement on Next Batch of F-35s

FILE -- Hill Air Force Base F-35As fly in formation over the Utah Test and Training Range, March 30, 2017. (U.S. Air Force/R. Nial Bradshaw)
FILE -- Hill Air Force Base F-35As fly in formation over the Utah Test and Training Range, March 30, 2017. (U.S. Air Force/R. Nial Bradshaw)

FARNBOROUGH, England -- The Pentagon and Lockheed Martin Corp. have reached a handshake deal on the next batch of F-35 Joint Strike Fighters.

"We have reached an agreement with the customer relative to a settlement for LRIP 11," Greg Ulmer, Lockheed vice president and general manager of the F-35 program, said Monday at the 2018 Farnborough Airshow, referring to Low Rate Initial Production.

"We're working to definitize the contract … but we have a handshake agreement relative to LRIP 11," he said during an F-35 briefing here.

The company on Sunday announced the sale agreement for 141 F-35s for the U.S., international partners, and other foreign militaries.

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The unit price for all three F-35 variants "went down significantly in the latest negotiation, demonstrating the program's continued progress, maturity and cost reduction," Lockheed officials said in a statement preceding Monday's briefing.

While Lockheed wouldn't cite costs until the contract is finalized, officials told Reuters the deal is worth roughly $13 billion. Prices came down about six percent from the last batch to roughly $89 million each for the F-35A, the most common version of the stealth fighter, Reuters said.

The company aims to reduce costs to $80 million per F-35A by 2020, officials said.

Lockheed recently delivered its 309th aircraft, Ulmer said. In 2018, the company will deliver 91 aircraft, up from 66 in 2017.

"In the next year, we'll deliver about 130, and then it will ramp up beyond that in the 2020 timeframe," Ulmer said, peaking at 160 aircraft per year in the Lot 15 deliveries by 2023.

Meanwhile, Lockheed is courting potential new customers. Germany wants to replace 90 of its aging Tornado combat aircraft and will begin phasing out the multi-role, fourth-generation aircraft by 2025.

Critics say if Germany chooses to procure the U.S.-made F-35, it could jeopardize the relationship it has with European partners and industry manufacturers. Officials have come out in favor of manufacturing a next-generation Eurofighter over buying the F-35.

"In regards to future potential, obviously I think in the near term we're all aware of Belgium, in particular, Germany, Finland [as new customers]," Ulmer said. "We've just submitted a [request for information] for Switzerland, and we continue to have conversations with other potential customers as well around the world."

As for Germany, he said, it "will play through. We'll respond to the proposal, and we're all in relative to the competition."

Ulmer said Lockheed has had "positive" discussions with partners at the Royal International Air Tattoo, adding the United Kingdom remains committed to the aircraft.

"I think there will be advocacy," he said.

-- Oriana Pawlyk can be reached at Follow her on Twitter at @Oriana0214.

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