Lockheed, Pentagon reach deal on 71 F-35 jets: Sources

WASHINGTON - Reuters

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Lockheed Martin Corp and the Pentagon have reached agreement on orders for the next two batches of F-35 fighter jets, a deal worth over $7 billion, a person briefed on the discussions told Reuters on late Jul7 29.

The deal covers 71 of the radar-evading planes, with 36 jets to be purchased in the sixth production lot, and 35 in the seventh. The total includes 60 F-35s for the U.S. military, and 11 for Australia, Italy, Turkey and Britain.

The agreement is good news for Lockheed, which generates about 15 percent of its revenues from the F-35 program, and its key suppliers: Northrop Grumman Corp and Britain’s BAE Systems. At a projected procurement and development cost of $392 billion, it is the Pentagon’s biggest arms program.

The agreement was negotiated without factoring across-the-board budget cuts imposed on the Pentagon in March, said the source, who was not authorized to speak publicly.

Lockheed officials last week said the Pentagon was trying to minimize the impact of the budget cuts on the output quantities in the seventh batch of low-rate production jets, which is funded under the fiscal 2013 budget.

Lockheed is building three models of the F-35 for the U.S. military and eight international partner countries: Britain, Australia, Canada, Norway, Turkey, Italy, Denmark and the Netherlands. Israel and Japan have also ordered the jet.
Lockheed Chief Executive Marillyn Hewson last week cited good progress in the negotiations and said the company expected to reach a deal in the near term.