F-35 faces headwinds as Japan order nears

WASHINGTON - Reuters

A Japanese order for 42 new F-35 fighter jets could worth more than $7 billion. AP photo

An expected order of around 42 new F-35 fighter jets from Japan next week will be a crucial shot in the arm for Lockheed Martin Corp, but the company still has hard work ahead to hammer out an agreement with the Pentagon for its next order of 30 planes.

The Japanese government is expected to announce tomorrow that it has chosen the radar-evading F-35 as its new fighter, a deal that could be worth over $7 billion over the next decade, and which would increase the odds that South Korea will follow suit with its own order for 60 fighters in coming years.

The Japanese order underscores growing overseas support for the F-35 and Lockheed, which is building three variants of the new single-seat fighter for the United States and eight partner countries: Britain, Norway, Canada, Australia, the Netherlands, Italy, Turkey and Denmark. Israel is also expected to finalize an initial order for F-35 fighters in coming weeks.

But the program - already restructured twice in the past two years - faces continuing headwinds at home, where Pentagon officials must cut spending by over $450 billion -- and possibly up to $1 trillion -- over the next 10 years.

“The next two to four weeks will reveal whether this is a program that is still growing, flat lined or in free fall,” said Jim McAleese, a defense consultant.

Lockheed and the Pentagon are in the early stages of negotiating the terms of a fixed-price, incentive fee contract for a fifth batch of 30 fighter planes, after Lockheed reluctantly agreed to shoulder the cost of some design changes that came up during testing, which is still going on even as low-rate production planes are rolling off the assembly line.

Pentagon F-35 spokesman Joe DellaVedova said formal contract negotiations began on Dec. 8.