The Pentagon and Lockheed Martin have reached a handshake agreement for the production of two additional lots of F-35 Joint Strike Fighters. This initial agreement covers lots 18 and 19 of the stealth fighter’s air vehicle and was announced by both Lockheed and the F-35 Joint Program Office in a joint statement. The handshake deal was first reported by Air and Space Forces Magazine.
Currently, the Joint Program Office (JPO) and Lockheed are negotiating the final terms of the contract. They plan to disclose the number of F-35s to be produced and their associated costs once the agreement is officially signed. Lockheed Chief Financial Officer Jay Malave stated during an October earnings call that they expect to finalize the deal for lots 18 and 19 by the end of 2024.
In late 2023, the Pentagon authorized Lockheed to commence work on lots 18 and 19 and provided an advance contract to fund the production of these jets. However, Lockheed has reported that the initial funds have been depleted. To prevent supply chain disruptions, Lockheed continues to fund the advance production of these jets independently.
Lockheed’s financial situation has been negatively impacted by delays in finalizing the contract for lots 18 and 19, alongside withheld payments due to incomplete upgrades. In October, the company reported approximately $700 million in delayed revenue related to the F-35 in its third quarter.
The previous F-35 contract, covering lots 15 through 17, was finalized in 2022 and allowed for the production of up to 398 F-35s for the U.S. military, international partners, and foreign military sales, valued at $30 billion.
For lots 15 through 17, the average cost of an F-35A was estimated at $82.5 million. For the Marine Corps’ F-35B, which is designed for short takeoff and vertical landing, the average cost was reported at $109 million. The carrier-based F-35C had an average cost of $102.1 million for these lots.
Although the prices for the F-35s in lots 18 and 19 are still unknown, they are anticipated to increase. Lockheed officials have indicated that the military’s plans to reduce F-35 purchases, alongside rising complexity in the latest fighter jets and inflation, are likely to drive up costs.
Additionally, on November 22, the Pentagon awarded Lockheed an $870 million contract to start procuring parts in advance for building lot 20 aircraft, primarily produced at their factory in Fort Worth, Texas.
Stephen Losey, who reported on this topic for Defense News, has a background in covering air warfare, leadership, and personnel issues, having also reported on U.S. Air Force operations in the Middle East.
