Lockheed Martin Corp likely to get major US contract for fighter jets

The U.S. Defense Department expects to award Lockheed Martin Corp an interim contract for the 12th batch of F-35 fighter jets "very shortly" and finalise the deal by next spring, the Pentagon's chief arms buyer Ellen Lord said.

When completed, the deal will mark another step forward for the world's biggest weapons programme after years of turmoil, cost overruns and schedule delays.

Belgium last month picked the aircraft over the Eurofighter Typhoon as a replacement for its ageing F-16s, agreeing a 4 billion euro ($4.5 billion) deal that made it the 12th country to select the F-35.

Negotiations on the U.S. contract are moving quickly on what is expected to be the largest order to date for the F-35, Lord told Reuters at a NATO industry conference. She said she expected to wrap up the deal much faster than with the previous tranche, but gave no details on the number of jets or the value of the deal.

Sources familiar with the matter say the deal will cover more than 250 F-35 aircraft for the U.S. military and other allies. The initial placeholder agreement will set a not-to-exceed price that could be as high as $20 billion, but military officials aim to negotiate a price well below that during the coming months, the sources said.

The Pentagon in September wrapped up an $11.5 billion contract with Lockheed for 141 F-35s, lowering the price for the most common version of the stealth jet by 5.4 per cent to $89.2 million. Lockheed has said it expects to cut the price of the F-35A to $80 million by 2020.

U.S. President Donald Trump and other U.S. officials have criticised the F-35 programme for the delays and cost overruns, but the price per jet has declined as production has increased.

Negotiations about the 11th batch of jets dragged on much longer than expected because Trump-appointed Pentagon leadership drilled deep into the costs, people familiar with the talks have said, but Lord said she is determined to complete the current round of negotiations much more quickly.

The contract will also benefit Northrop Grumman Corp and Britain's BAE Systems, which are key suppliers to Lockheed on the aircraft, as well as engine maker Pratt & Whitney, owned by United Technologies Corp.

(With inputs from agencies.)