Pentagon cuts cost of F-35 fighters by 4 percent: sources

Wed Dec 12, 2012 8:39pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Andrea Shalal-Esa

WASHINGTON (Reuters) - The Pentagon will pay about 4 percent less for each new Lockheed Martin Corp (LMT.N: Quote) F-35A fighter jet when it signs a deal worth $3.8 billion with the No. 1 U.S. defense contractor on Friday, according to sources familiar with the deal.

Each of the 22 conventional takeoff and landing jets in the fifth production contract will cost around $107 million, excluding the engine, said the sources, who were not authorized to speak publicly.

That compares to a price of $111.6 million for the F-35As to be used by the Air Force that were included in the fourth contract with Lockheed.

The contract for 32 jets also includes 3 B-models for the U.S. Marine Corps, which can land vertically, and seven C-models to be used on aircraft carriers for the U.S. Navy.

The Defense Department is negotiating a separate contract with Pratt & Whitney, a unit of United Technologies Corp (UTX.N: Quote), for the engines that will power the new warplanes. Pentagon officials hope to conclude that deal by year end.

A senior defense official said the Pentagon plans to sign the deal with Lockheed on Friday, a long-awaited agreement that moves forward the most costly weapons program in U.S. history and should make future negotiations easier.

The deal gives Lockheed a 12-percent profit margin, according to Loren Thompson, a defense consultant with close ties to the company.

Lockheed shares closed 19 cents or 0.21 percent lower at $91.81 on the New York Stock Exchange on Wednesday.   Continued...