F-35 Unit Costs Coming Down, But Still Well Over $100 Million

The unit price of the F-35 Lightning II stealth fighter has fallen again in the latest production lot to be agreed, but is still well above $100 million. Lockheed Martin announced this week an agreement signed with the Pentagon for 43 airframes in the eighth low-rate initial production lot (LRIP-8). The company said that the average cost for the airframes is 3.5 percent lower than in the LRIP-7 contract signed last year, and 57 percent lower than the first LRIP-1 airframes.

Negotiations for the separately procured F135 engines are conducted separately with Pratt & Whitney and are running behind the airframe agreements. A deal for the 36 engines needed for LRIP-7 was concluded only last month. If the average cost of those powerplants ($18.8 million) is added to the unit costs specified this week for the LRIP-8 airframes, the result would be about $113 million for an F-35A, $120 million for an F-35B and $133 million for an F-35C. However, that calculation overestimates the cost of the F-35A/C versions and underestimates the cost of the F-35B with its more expensive STOVL powerplant. P&W has declined to disclose the breakdown of the engine cost by F-35 variant.

LRIP-8 will include the first F-35As for Israel (two), Japan (four), two more each for Norway and Italy, and 19 for the U.S. Air Force. The UK will receive four F-35Bs—its first operational aircraft—and the U.S. Marine Corps will get six, plus a single F-35C, with three more F-35Cs going to the U.S. Navy. Deliveries will begin in the early spring of 2016.

Lockheed Martin noted that it will be responsible for any cost overruns on the LRIP-8 contract. It will return 20 percent of any underruns to the U.S. government. A "concurrency clause" requires Lockheed Martin to share equally with the government any changes arising from the ongoing system development and demonstration phase. A total of 115 F-35s have been delivered to date, including test aircraft.