F-35 costs fall significantly as production ramps up

The latest production run will see the cost of the F-35 fall with the cost of the F-35A falling below $100m in addition to significant decreases in the cost of the other two variants, the F-35B and F-35C.

According to a press release:

“The price reduction for the air vehicle was 8 percent and when adding in engine and fee, the overall total jet reduction is 7 percent.

This is the largest F-35 contract ever for 90 jets, a more than 40 percent increase from LRIP 9 for 57 jets.”

The US Department of Defense and Lockheed Martin have reportedly reached an agreement in principle on the lowest priced F-35 run to date marking the first time the price for an F-35A has fallen below $100M.

Known as Low-Rate Initial Production Lot 10 (LRIP-10), the contract is for 90 aircraft and represents more than a 60 percent price reduction for the F-35A variant since the first LRIP-1 contract.

The F-35B and F-35C variants price were also substantially reduced. In total the Lot 10 contract represents a $728 million reduction when compared to Lot 9.

Lt. Gen. Chris Bogdan, F-35 Program Executive Officer said:

“The LRIP-10 contract is a good and fair deal for the taxpayers, the U.S. Government, allies, and Industry. We continue to work with Industry to drive costs out of the program.”

Lockheed Martin describe the F-35 in the following way:

“The supersonic, multi-role F-35 represents a quantum leap in air dominance capability. It combines next generation characteristics of radar evading stealth, supersonic speed, and fighter agility with the most powerful and comprehensive integrated sensor package of any fighter aircraft in history.

The F-35 is unmatched in its capability by any other tactical fighter aircraft in the world delivering unprecedented lethality and survivability.”

It’s understood that the F-35A variant comprises approximately 85 percent of the programme. We understand that the F-35A unit price in LRIP-10, including aircraft, engine and fee, is roughly seven percent lower than the previous LRIP-9 contract.

Over the past two procurement lots (LRIP-9 and 10), the price of the F-35A has dropped 12 percent.

Jeff Babione, Lockheed Martin F-35 Vice President and General Manager said:

“With initiatives like Blueprint for Affordability and the natural learning curve, we are substantially bringing the cost of each aircraft down and at the same time the F-35 program will continue to add thousands of additional jobs to the U.S. economy as we increase production year over year.”

Lockheed Martin say that in addition to procuring the air vehicles, this contract funds manufacturing-support equipment and ancillary mission equipment. Deliveries of 90 aircraft begin in early 2018.

“To date, more than 200 operational F-35s are operated by eight different nations including Australia, Italy, Israel, Japan, Netherlands, Norway, United Kingdom and United States. In total, the F-35 program today plans to produce more than 3,000 aircraft with approximately 600 of those aircraft presently planned to be procured by our international allies.”

F-35 Low Rate Initial Production 10 (LRIP 10):

· 44 F-35A for the U.S. Air Force

· 9 F-35B for the U.S. Marine Corps

· 2 F-35C for the U.S. Navy

· 3 F-35B for UK

· 6 F-35A for Norway

· 8 F-35A for Australia

· 2 F-35A for Turkey

· 4 F-35A for Japan

· 6 F-35A for Israel

· 6 F-35A for South Korea

Lockheed Martin tell us that the Lot 10 contract represents a $728 million reduction in total price when compared to Lot 9.

The approximate per variant unit prices, including jet, engine and fee are as follows:

· F-35A: $94.6 million (7.3% reduction from Lot 9)

· F-35B: $122.8 million (6.7% reduction from Lot 9)

· F-35C $121.8 million (7.9% reduction from Lot 9)