Lockheed sees deal soon with Pentagon for 160 more F-35 combat jets

By Andrea Shalal

RAF FAIRFORD, England (Reuters) - Lockheed Martin Corp said on Thursday it expected to reach an agreement soon with the U.S. Defense Department about contracts for the next 160 F-35 radar-evading fighter jets, two long-awaited deals valued at around $15 billion.

Jeff Babione, Lockheed's F-35 program manager, told reporters he was "very, very encouraged" by the discussions about the ninth and 10th contracts, which are being conducted in tandem, and expected to finalize a deal with the Pentagon soon.

Babione said the price of the F-35A conventional takeoff and landing version of the multi-role jet would drop to under $100 million per plane in the 10th low-rate production batch. That includes an engine built by Pratt & Whitney, a unit of United Technologies Corp.

"I know it's going to be less, it's just how much less," he said. He said Lockheed was still working to drive the price of the jets down to around $85 million by 2019.

Six of the F-35 Lightning IIs will fly this week at the Royal International Air Tattoo near Fairford, England, the world's largest military airshow, along with a U.S. Air Force F-22 Raptor, also built by Lockheed, the Pentagon's largest supplier.

The F-35 had been due to make its international premiere at the same air show two years ago, but those plans were scrapped after an engine failure grounded the overall F-35 fleet.

Two F-35s made their premier appearance at an international air show in the Netherlands last month after carrying out a series of tests that officials said showed that the new stealthy jets were no noisier than previous jets.

Babione said the program had come a long way in the past two years, with more than 180 F-35s now flying and the U.S. Air Force poised to declare an initial squadron ready for combat between August and December.

A year ago the U.S. Marine Corps declared as ready for combat its first squadron of F-35Bs, the short take-off and vertical landing version. It plans to deploy that first squadron to a U.S. air base in Iwakuni, Japan early next year.

Babione said Lockheed was ready to invest an additional $60 million to $100 million in new technologies or changes that can further lower the cost of the jets under a program called Blueprint for Affordability.

The first phase of that program involved investments of $170 million by Lockheed and primary development partners Northrop Grumman Corp and BAE Systems Plc.

(Reporting by Andrea Shalal; Editing by Susan Fenton, Greg Mahlich)