Lockheed expects June award of ‘combined’ F-35 production deal
“What our customer is telling us now is to expect lot 18 and lot 19 to be combined into a single award,” said Lockheed Chief Financial Officer Evan Scott.
An F-35A Lightning II assigned to the F-35A Lightning II Demonstration Team performs at the Capitol Air Show over Sacramento, Calif., July 15, 2024. The F-35A is an agile, versatile, high-performance, 9-G capable multirole fighter that combines stealth, sensor fusion and unprecedented situational awareness. (U.S. Air Force photo by Staff Sgt. Zachary Rufus)
WASHINGTON — Lockheed Martin now expects to finalize a contract for the next two batches of F-35 Joint Strike Fighter jets by the end of June, the company’s chief financial officer said today.
Earlier this year, Lockheed executives said they expected to definitize its F-35 Lot 18 contract with the Pentagon in the first half of the year, with Lot 19 following by the end of 2025.
“We actually see that has the potential to accelerate,” Evan Scott told investors during a Bank of America conference today. “What our customer is telling us now is to expect lot 18 and lot 19 to be combined into a single award. … the overall award now is probably going to happen later in the second quarter than if lot 18 had been a standalone [deal].”
The F-35 Joint Program Office did not immediately respond to a request for comment.
The Pentagon in December awarded Lockheed a $11.8 billion initial contract, known as an undefinitized contract action, which gave Lockheed a much-needed cash infusion as it continued production of the 145 jets that comprise Lot 18 in advance of a final deal that cements the value of the contract. That agreement came after a November handshake deal for Lots 18 and 19 that did not include formally announced quantities or contract amounts, but indicated that negotiations were moving forward.
Greg Ulmer, the top executive at Lockheed’s aeronautics unit, told Breaking Defense last July that unit costs for the upcoming batch of F-35s could continue to be negatively influenced by inflation as well as a lower annual buy rate from the US military.
Scott said that F-35 production is “looking solid” to hit the 156 jets goal for 2025. F-35 deliveries are projected to hit 170 to 190 aircraft this year as Lockheed hands over aircraft in its inventory after a one-year delivery pause ordered by the Pentagon as Lockheed hammered out technical problems on the jet’s Technology Refresh 3 upgrade. (Deliveries resumed last July.)
Beyond the F-35 program, Scott said Lockheed could see some “additional cost pressure” for a classified aeronautics program that will be reported during second quarter earnings.
In January, the company reported a $555 million cost overrun for 2024 on a classified aerospace program with a fixed-price incentive fee contract, citing “highly complex design and systems integration.” The company conducted a review of the program due to undisclosed near-term milestones and trends experienced in the fourth quarter, and recorded losses based on “higher projected costs in engineering and integration activities that are necessary to achieve those forthcoming milestones,” it said then.
