Lockheed Martin Corp (LMT.N) and Department of Defence (DoD) announced an agreement worth about USD 8.5 billion for 90 F-35 jets.
The deal for the tenth lot of the stealth fighter aircraft has brought the price per jet to below USD 95 million for the first time, compared to USD 102 million in the previous batch, a savings of USD 728 million.
This is more than the USD 600 million that President Donald Trump claimed, he had been able to shave off from the F-35 program, which was described as “out of control” by him in December.
“President Trump’s personal involvement in the F-35 program accelerated the negotiations and sharpened our focus on driving down the price,” said Lockheed Martin in a statement.
As production ramps up, the price per jet has been steadily declining and defense analysts have said that the discount hailed by the President was in line with what had been flagged by Lockheed officials for months.
“The increase in the number of aircraft in this agreement enables us to reduce costs by taking advantage of economies of scale and production efficiencies,” added Lockheed.
The prime contractor, Lockheed, and its partners, which includes United Technologies Corp’s (UTX.N) Pratt & Whitney, Northrop Grumman Corp (NOC.N) and BAE Systems Plc (BAES.L) have been continuously working on building a more cost-effective supply chain to fuel the production line in Fort Worth, Texas.
The cost per plane should decrease about “6 to 7 percent” for the latest contract, said Air Force Lieutenant General Chris Bogdan, who runs the F-35 program for the Pentagon on 19th Dec.