AIRSHOW-Big savings needed to justify F-35 block buy - Lockheed

By Andrea Shalal

PARIS, June 15 (Reuters) - Lockheed Martin Corp, maker of the F-35 fighter jet, said on Monday it realized it would have to generate significant savings to help justify a block buy of up to 500 aircraft beginning in fiscal 2018.

Lorraine Martin, Lockheed's F-35 program manager, said her company and others involved in the program were working hard to identify ways to further drive down the cost of the $391 billion weapons program and shore up support for a multi-year purchase.

U.S. lawmakers, who would need to approve any multi-year procurement deal, usually expect savings of around 10 percent to back such deals.

"We've got to have significant savings to make the commitment worthwhile to them," Martin said after a briefing at the 2015 Paris Airshow. "We're working with all of the industrial base right now to figure out every trick, tool and capability to help take cost out."

Martin said longer-running procurement deals provided a more stable outlook for Lockheed and the huge number of suppliers that provide components for the F-35 jets, making it easier for even tiny suppliers to invest in new tooling or other ways to lower costs.

Martin said Lockheed was due to provide an estimate of the likely cost savings to the Pentagon by the end of the summer.

She said Lockheed supported the Pentagon's push given the certainty of a block buy, the sheer scale of the resulting order, and the ability to drive down costs by ordering larger quantities of titanium and other materials.

Martin said a block buy could include 460 aircraft, although the number could rise to around 500 new aircraft if Canada and Denmark decided to place orders.

The Pentagon's chief arms buyer, Frank Kendall, last month said the Defense Department was hoping to conclude a multi-year agreement that would cover purchases by the U.S. military and other countries involved in the program.

(Reporting by Andrea Shalal; Editing by Mark Potter)