Pentagon announces F-35 jet prices for next three years

By Mike Stone

WASHINGTON (Reuters) - The Pentagon on Tuesday announced pricing details for its agreement with Lockheed Martin Co that lowers by 12.7% the cost of the F-35 jets it plans to purchase through 2022, which may encourage other nations to buy warplanes.

Lockheed executives have said that any country with an F-16 jet, the predecessor to the F-35, is a potential customer.

The F-35A, the most common version of the aircraft, will each cost $82.4 million in 2020, $79.17 million in 2021 and $77.9 million in 2022, the Pentagon told reporters at the Pentagon on Tuesday.

The agreement means the U.S. government and allies plan to purchase 478 F-35 fighter jets at a cost of $34 billion over the three years.

In June, the U.S. Department of Defense revealed that the price for the F-35A fell by 8.8% to $81.35 million in fiscal 2020. The previous price, which has been negotiated on an annual basis, was $89.2 million per F-35A.

The June agreement did not contain finalized pricing for the Pentagon's purchase options for the jets in 2021 and 2022, because Congress has yet to approve budgets for those years.

Lockheed Martin's goal is to deliver 131 aircraft in 2019 with production growing to more than 149 aircraft deliveries in 2020 and up to 169 jets per year in later years.

The F-35 currently makes up about 25% of Lockheed's annual revenue.

The F-35 program has long aimed at expanding the fleet to more than 3,000 jets and bringing the unit price of the F-35A below $80 million through efficiencies gained by ordering larger quantifies.

About 10 countries are eyeing the purchase of the F-35, said Air Force Lieutenant General Eric Fick, head of F-35 Lightning II Joint Program Office.

"This puts the cost per unit below our earlier forecasts," Norwegian Defense Minister Frank Bakke-Jensen said in a statement.

"Cost reductions, good negotiations and cooperation in the partnership are showing results. That's very positive and boosting our confidence in the acquisition," he added.

Norway has so far received 22 of the fighter jets from Lockheed, and will take another 18 over the next three years. In total, the country plans to buy 52 F-35s.

More U.S. allies have been eyeing a purchase of the stealthy jet including Finland, Switzerland and the United Arab Emirates.

While the financial goals are being exceeded, the Pentagon said earlier this month that a decision to move into full-rate production could be delayed from December until 2021 because of issues integrating the jet with its testing and training simulators.

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; and carrier-variant F-35C jets for the U.S. Navy.

(Reporting by Mike Stone in Washington, additional reporting by Terje Solsvik in; editing by Chizu Nomiyama and Steve Orlofsky)