One of the most sophisticated warplanes ever made is the F-35. Modern international security relies heavily on the fighter jets produced by Lockheed Martin Corporation (NYSE:LMT). Not only can the stealth combat aircraft carry out successful strike missions, but it also has intelligence, reconnaissance, and surveillance capabilities. The F-35 is available in three different variants: the F-35A, F-35B, and F-35C. The cost of each type varies based on the order’s parameters. AeroTime reports that the jet costs $177 million per unit, whereas Fortune put the cost of the F-35 at $150 and $200 million.
Due to a more advanced product, inflation, and a decline in U.S. sales volume, the unit cost of F-35 fighters will gradually increase in a $30 billion, three-lot deal that was announced on December 30. Annual deliveries will also decrease.
In the meanwhile, after an F-35B crashed on December 15, some F-35s are still grounded and others have not yet been delivered.
The agreement calls for the construction of 398 F-35s over the course of three years, including overseas orders. It also defines production for Lots 15 and 16 and establishes alternatives for Lot 17. According to the agreement, Lot 15 will contain 145 aircraft, Lot 16 will contain 127 aircraft, and Lot 17 will contain up to 126 aircraft, including the first aircraft to be delivered to Belgium, Finland, and Poland.
The Pentagon had originally intended for 23 fewer jets, but Lot 17 is open-ended. In July 2022, Pentagon acquisition and sustainment chief William LaPlante stated that the “handshake deal” on the three lots was “based on” as many as 375 jets.
In any case, deliveries are decreasing—478 aircraft were covered by the 2019 Lot 12–14 agreement. In recent years, the Air Force has made fewer requests for F-35s, stating that it would rather wait for the full Block 4 model of the aircraft to prevent subsequently retrofitting older aircraft with the more powerful configuration. Other services have used a similar strategy. Strong foreign sales of the F-35 have, however, somewhat offset the delay in purchasing. Additionally, Congress has restored some of the jets that the service did not ask for.
The average number of aircraft per year for Lot 15–17 that has been agreed upon is 132, far fewer than the 156 that Lockheed Martin CEO Jim Taiclet had projected during a call with investors a year prior. Lockheed is keen to steer clear of a production cycle characterised by booms and busts since these cycles negatively impact labour and material costs.
CFO John Mollard stated that an oscillating sawtooth pattern of production rates is the last thing that investors want to see in a January 2022 conference call.
Deal director and programme executive officer Lt. Gen. Michael Schmidt said in a statement announcing the agreement that it “strikes the right balance between what’s best for the U.S. taxpayers, the military services, allies, and our foreign military sales customers.”
The average cost of a fighter unit, excluding the Pratt & Whitney F135 engine, is estimated to be $75 million. The final three-lot transaction with the engine resulted in a unit cost per plane that was less than $80 million. Air & Space Forces Magazine was not given an all-in cost by the JPO for the fighters in Lots 15–17.
The Lot 15–17 cost of an F-35 is “from $70.2 million to $69.9 million for the F-35A, $80.9 million to $78.3 million for the F-35B, and $90 to $89.3 million for the F-35C,” according to a Lockheed representative, only for the airframe and mission equipment.
The B model is a short takeoff/vertical landing variant, the C model is built for aircraft carrier operations, and the A model is a standard takeoff type. In order to endure carrier takeoffs and landings, it has larger wing and tail surfaces in addition to other structural modifications.
“The F-35A aircraft vehicle cost, on average, only increased by 6.5 percent; less than the rate of inflation,” the Lockheed representative continued, comparing Lot 14 to Lot 17. The production of the Lot 15 aircraft has already begun.
This agreement marked the lengthiest bargaining time ever on an F-35 lot. The “handshake deal” was reached ten months after it was anticipated to be completed, after more than a year of negotiations. According to former JPO officials, this was because of protracted bargaining over issues such as inflation, Lockheed labour costs, the COVID-19 pandemic’s residual effects on the supply chain, and the uncertainties surrounding the services’ planned purchases. An additional five months of wrangling resulted in the final agreement.
Because the plane is being produced with additional capability, Lockheed has been warning for the past two years that lots 15 and later will cost more. The fighter’s largest customers, the U.S. services, have seen slower sales growth, which has been another problem.
Tech Refresh 3 (TR-3) is a set of enhanced CPUs and other features that enable the Block 4 version of the F-35, and Lot 15 is the first to get them. A more potent memory and a panoramic cockpit display are two further enhancements in Lot 15.
About seventy-five adjustments are being worked on as part of the Block 4 update. According to a Lockheed representative, these include “radar and [sensor] fusion updates,” as well as new or improved weaponry, networking and communications upgrades, electronic warfare improvements, and cockpit and navigation modifications.
There are currently 894 F-35 aircraft in service globally, up from 141 delivered in 2022. When the 1,000th F-35 comes off the manufacturing line in late summer, Lockheed officials have stated they want to celebrate at their Fort Worth, Texas, factory.
Lockheed was scheduled to deliver 148 F-35s in 2022, but the government stopped taking orders for the fighter after an F-35B crashed on December 15. The disaster aircraft experienced an engine issue during vertical landing; a video of the incident went viral last month. The pilot ejected from low-altitude aircraft alive. At the time of the crash, the government had not yet received possession of the jet.
Despite the fact that the aircraft were completed, the halt meant that Lockheed would not be able to deliver the full seven aircraft scheduled for 2022. Both the acceptance and final test flights were halted by the accident.
Nine aircraft are currently awaiting delivery and the last test.
According to an Air Force spokesperson, a “small number” of F-35As in USAF service are being grounded until a technical directive or compliance issue is resolved. She did not elaborate, but a TC/TD often indicates that a system or part needs to be inspected; if a flaw or malfunction is discovered, the part needs to be replaced.
According to a government source, the issue appears to be related to the engines, and as of right now, only aircraft with “a few dozen” or fewer flying hours are being examined for the issue.
The Air Force official stated that “further ongoing analysis will determine the scope and duration” of the impact on the USAF F-35A fleet. She did not specify the number of F-35As impacted or whether they are spread throughout the combat air forces or part of a single unit.
