[Discussion] Lockheed and Pentagon Secure $24.3B Deal for 296 F-35 Jets, Production Starts 2026

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Lockheed and Pentagon Reach $24.3 Billion Agreement for F-35 Production

Lockheed Martin and the Pentagon have announced the finalization of a $24.3 billion agreement to produce 296 F-35 fighter aircraft, marking a major milestone in the ongoing development and procurement of the advanced stealth jet. The deal, covering production lots 18 and 19, brings over two years of negotiations to a close and sets a course for deliveries to begin in 2026.

Breakdown of the Agreement and Production Plans

The newly inked contract includes 148 F-35 airframes in each of the two production lots. While the total figure encompasses aircraft destined for both U.S. military branches and international partners, further details on the specific distribution and per-unit costs remain undisclosed. According to the Pentagon’s Joint Program Office (JPO), the agreement strictly covers the airframes; the jet engines, supplied by Pratt & Whitney, are subject to separate contracts. Most recently, Pratt & Whitney was awarded nearly $2.9 billion to begin engine production for Lot 18, with further engine contracts expected to be finalized in 2026.

Deliveries for jets under this contract are scheduled to commence in 2026. The JPO indicated that once the engine contracts are finalized, a clearer “flyaway cost” for each aircraft—essentially the price per jet ready for operational deployment—will be available. For context, previous production lots reported an average flyaway cost of $82.5 million for the F-35A variant.

Pricing Dynamics and Long-Term Trends

Lockheed Martin confirmed that the price increase per jet in lots 18 and 19 was held below the rate of inflation, despite industry-wide challenges such as rising raw material costs. The Pentagon acknowledged that Lot 18 experienced notable price pressures but stated that, when adjusting for inflation, costs remained generally in line with those from previous lots.

The prolonged negotiations, which began in mid-2023, reflected the complexities involved in large-scale defense procurement programs, particularly as global demand for the F-35 remains strong. Notably, political factors and recent geopolitical developments have added layers of complexity to international sales, with the F-35 program sometimes caught in broader diplomatic currents.

Modernization Efforts and Future Outlook

The finalized contract comes at a time when the Pentagon is actively pursuing upgrades for the F-35 fleet. However, recent findings from the Government Accountability Office indicate that the high-profile Block 4 modernization program will face delays, now slated for 2031 with a narrower set of enhancements than originally planned.

Despite these challenges, both Lockheed Martin and the Department of Defense remain confident in the F-35’s place at the forefront of modern air combat. In a statement, Chauncey McIntosh, Vice President and General Manager for the F-35 program at Lockheed, highlighted the steady demand and reaffirmed the company’s commitment to supporting its customers and the long-term role of the F-35 in securing operational advantage.

Conclusion

The conclusion of this multi-year negotiation signals continued investment in the F-35 platform amid shifting global security dynamics. With production moving forward under the new contract, stakeholders will be monitoring both cost and capability as the program advances into its next phase.

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