Australian F-35 orders will help drive down price -Lockheed

Reuters

By Andrea Shalal

WASHINGTON, April 23 (Reuters) - Australia's decision to order 58 more F-35 fighter jets built by Lockheed Martin Corp by 2023 will help drive down the cost of the stealthy warplane and strengthen the jet's presence in Asia, a senior Lockheed official said on Wednesday.

Steve O'Bryan, Lockheed's vice president for F-35 business development, said 10 countries had now committed to buying the F-35, and Lockheed expected others to follow suit this year.

Australian Prime Minister Tony Abbott announced Wednesday that his country would spend A$12.4 billion ($11.61 billion) to buy 58 more F-35s, bringing its total order to 72 jets, including 14 F-35s already ordered in 2009.

Lockheed is building three models of the F-35 for the U.S. military and nine other countries that have placed orders or announced plans to buy: Britain, Australia, Norway, Italy, Turkey, the Netherlands, Israel, Japan and South Korea.

Canada and Denmark helped fund the plane's development and remain part of the initial partnership, but they are reassessing their fighter procurement plans. Singapore is also expected to order F-35 jets, although the timing remains uncertain.

"Australia's decision is another affirmation for the program," O'Bryan told reporters during a teleconference. "That will add a significant amount of quantity into those near-term years, driving down the price ... of the airplane."

The Pentagon last week released a revised estimate for the cost of the 2,443 planes to be purchased by the U.S. military that showed a 1.9 percent increase.

U.S. Air Force Lieutenant Chris Bogdan, the Pentagon's F-35 program chief, said additional orders would drive down the cost, which had increased largely due to budget-driven delays in orders by the Pentagon and other allies.

O'Bryan said quantity was the single biggest factor driving cost reductions on the aircraft, so any additional orders would help lower the projected procurement cost.

He said Lockheed was working closely with the Pentagon and engine maker Pratt & Whitney, a unit of United Technologies Corp , to drive down the cost of operating the plane.

Lockheed is also investing its own money to generate future savings by making it easer to build, maintain and operate the jets, including efforts to reduce the weight of the aircraft, which would have a significant effect on its fuel usage rates.

O'Bryan said Lockheed expected additional countries to join the program this year, but declined to elaborate which ones.

Asked if Singapore was likely to order jets this year, he said only that Singapore was evaluating the jet and Lockheed stood ready to support Singapore when it completed that process.

He said the jet would be operated throughout Asia by Japan, South Korea, Australia and three U.S. military services, which would result in lower operating and maintenance costs for all the allies since they could share sustainment facilities.

Canada was going through a thorough and transparent seven-step process as it decided whether to proceed with its planned F-35 purchases, or launch a new competition, he said.

O'Bryan also Australian suppliers would now be able to compete for billions of dollars of additional work on the aircraft, topping even Australia's estimate that its companies would get $1.5 billion in orders as a result of the new order.

"We're highly confident that we will exceed the value of $1.5 bln in contracts that the Australian government talked about," he said. "We see opportunities for them in the multiple billions of dollars." (Reporting by Andrea Shalal; editing by Andrew Hay)

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