Lockheed to announce $8.5 billion F-35 order on Friday-sources

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By Mike Stone

WASHINGTON, Feb 3 (Reuters) - The U.S. Department of Defense and Lockheed Martin Corp are set to announce a deal worth about $8.5 billion for 90 F-35 jets on Friday, people familiar with the talks said.

The deal for the tenth batch of the stealthy fighter aircraft brings the price per jet below $95 million for the first time, compared to $102 million in the previous batch, saving the Pentagon more than $700 million, the people said.

This is more than the $600 million that U.S. President Donald Trump claimed on Monday he had been able to shave off from the F-35, the Pentagon's costliest arms program.

Trump had lashed out at the program as being "out of control" in December and vowed to bring the prices down.

Defense analysts have said the discount hailed by Trump was in line with what had been flagged by Lockheed and Pentagon officials for months.

A Lockheed representative declined to comment. A representative for the Defense Department's F-35 program did not immediately respond to requests for comment.

Though the F-35 program has been criticized by Trump as too expensive, the price per jet has been steadily declining as production ramps up.

Lockheed, the prime contractor, and its partners have been working on building a more cost-effective supply chain to fuel the production line in Fort Worth, Texas.

Air Force Lieutenant General Chris Bogdan, who runs the F-35 program for the Pentagon, said on Dec (Shanghai: 600875.SS - news) . 19 the cost per plane should decrease about "6 to 7 percent" for the latest contract.

Lockheed's F-35 program manager Jeff Babione also said last summer that the price of the F-35A conventional takeoff and landing version of the jet would drop to under $100 million per plane for the first time.

Lockheed and its main partners, including Northrop Grumman Corp, United Technologies Corp's Pratt & Whitney and BAE Systems Plc (Other OTC: BAESF - news) , have been developing and building F-35s for the U.S. military and 10 allies.

The F-35 comes in three configurations, the A-model for the U.S. Air Force and U.S. allies; a F-35 B-model which can handle short takeoffs and vertical landings for the Marine Corps and the British navy; and carrier-variant F-35C jets for the U.S. Navy.

The U.S. Defense Department expects to spend $391 billion in the coming decades to develop and buy 2,443 of the supersonic warplanes.

(Reporting by Mike Stone in Washington; Editing by Soyoung Kim and Bernadette Baum)