UPDATE 1-Lockheed sees next U.S. F-35 fighter contract early this summer

Mon Jun 9, 2014 9:55pm EDT
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(Adds comments on possible Canadian order, software; in paragraphs 10-13)

By Andrea Shalal

WASHINGTON, June 9 (Reuters) - Lockheed Martin Corp expects to sign a contract with the U.S. government early this summer for 43 more F-35 fighter jets, but the deal is unlikely to match price reductions seen on the last few contracts, a top company executive said Monday.

Chief Financial Officer Bruce Tanner said the company had driven the price of the jets lower by 4 percent to 5 percent in each of the previous three contracts, but savings of that magnitude were unlikely on the eighth batch of jets, given the lack of large quantity increases in the order.

"I'm not sure we will get to that level, but I do expect we'll have a reduction from the previous lot on an aircraft-to-aircraft basis," Tanner told Reuters in an interview during the company's annual "media day."

Lockheed submitted a proposal for the next lot of F-35 jets in December. The company finalized a contract valued at $7.8 billion in September for 71 more F-35s, including a sixth batch of 36 jets, and a seventh batch of 35 aircraft.

In April, the Pentagon's F-35 program chief, Air Force Lieutenant General Chris Bogdan, said he hoped to sign contracts with both Lockheed and engine maker Pratt & Whitney, a unit of United Technologies Corp, by the end of May.

Orlando Carvalho, executive vice president of Lockheed's aeronautics division, said the two sides could sign a deal before the end of June, ahead of the jet's international premier at two air shows in Britain in July.

"I think we're closing on a final settlement, but we still have a little ways to go. Let's hope by the end of the month we have it done," he told Reuters.   Continued...