WASHINGTON (Reuters) – The Pentagon announced pricing details on Tuesday for its agreement with Lockheed Martin Co that lowers the cost of the F-35 jets it plans to purchase through 2022 by 12.7%, which may encourage other nations to buy warplanes.
Lockheed executives have said that any country with an F-16 jet, the predecessor to the F-35, is a potential customer.
The F-35A, the most common version of the aircraft, will cost $82.4 million in 2020, $79.17 million in 2021 and $77.9 million per jet, the Pentagon told reporters at the Pentagon on Tuesday.
Over the three years, the agreement will be worth $34 billion for 478 F-35 fighter jets.
In June, the U.S. Department of Defense revealed that the price for the F-35A fell by 8.8% to $81.35 million in fiscal 2020, but the cost of the engine made by Pratt and Whitney was responsible for the $1 million cost difference. The previous price which has been negotiated on an annual basis was $89.2 million per F-35A.
The June agreement did not contain finalized pricing for the Pentagon’s purchase options for the jets in 2021 and 2022.
The options exist because official purchases cannot be made until the U.S. Congress approves an annual budget for those years.
Lockheed Martin’s goal is to deliver 131 aircraft in 2019 with production growing to over 149 aircraft deliveries in 2020 and 160 and 169 jets per year in the later years.
The F-35 currently comprises about 25% of Lockheed’s annual revenue.
The F-35 program has long aimed at growing the fleet to more than 3,000 jets and bringing the unit price of the F-35A below $80 million through efficiencies gained by ordering larger quantifies. The June agreement revealed that the price would drop below the stated goal of $80 million for an F-35A one year earlier than expected.
About 10 countries are eyeing the purchase of the F-35, Air Force Lieutenant General Eric Fick head of F-35 Lightning II Joint Program Office said.
U.S. allies have been eyeing a purchase of the stealthy jet including Finland, Switzerland and the United Arab Emirates.
While the financial goals are being exceeded, the Pentagon said earlier this month that a decision to move into full-rate production could be delayed from December until 2021 because of issues integrating the jet with its testing and training simulators.
Full-rate production contracts are more lucrative for defense companies than low rate production contracts.
The F-35 comes in three configurations, the A-model for the U.S. Air Force and U.S. allies; a F-35 B-model which can handle short takeoffs and vertical landings; and carrier-variant F-35C jets for the U.S. Navy.
Reporting by Mike Stone in Washington, editing by Louise Heavens and Chizu Nomiyama