Lockheed Martin ‘close’ to multi-billion dollar F-35 deal

Picture: Lockheed Martin

Picture: Lockheed Martin

Lockheed Martin is reportedly in the final stages of a deal worth more than US$37 billion (A$48.5 billion) to sell a record 440 F-35 fighter jets to a group of 11 nations, including Australia.

The sale represents a major shift in sales practices from annual purchases to more economic multi-year deals that lower the cost of each jet, according to a report by Reuters which attributes two anonymous sources “familiar with the talks”.

The pricing of the jet, which is set to make its Paris Airshow debut this week, was still not final, the report explained – although sources claimed the average price of the 440 jets was expected to be $85 million.

The multi-year deal for the fighters would consist of three tranches over fiscal years 2018-2020.

A representative for the customers including the United States did not immediately respond to a request for comment on Sunday.

Last week, representatives from 11 F-35 customer nations met in Baltimore, Maryland to discuss terms and toured a Northrop Grumman Corp facility that provides equipment for the jet.

Those nations included Australia as well as 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 sources reportedly said.

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

The memorandum of understanding will guarantee contracts will take place in each successive future year.

This allows the manufacturing group led by Lockheed to take advantage of greater economies of scale, reducing the cost of each jet.