By Mike Stone
WASHINGTON (Reuters) – Deliveries of F-35 jets to the U.S. military have resumed, but the U.S. government is withholding the final payment of $5 million for each jet until the completion of a long-delayed technology upgrade, the F-35 Joint Program Office said on Thursday.
The US resumed taking F-35 deliveries of the jet this summer after a months-long hiatus despite the jet’s Technology Refresh 3 (TR-3) running behind schedule. The software and hardware improvements include better displays, computer memory and processing power.
Deliveries trigger a payment to Lockheed Martin, but withholding $5 million per jet will hurt Lockheed’s profit margin and pressure the company to resolve this problem, which it has said will still take months.
The advanced fighter jet contributes 27% of Lockheed’s sales, as the company plans to deliver about 100 to the US this year and more than 150 by 2025.
“We have coordinated terms with Lockheed Martin. As part of the agreement, approximately $5 million per aircraft is being withheld and will be released when combat capability is delivered,” a spokesman for the F-35 Joint Program Office said.
The F-35 costs an average of $82.5 million each for the F-35A variant delivered in calendar years 2023, 2024 and 2025. The short takeoff and landing “B” variant and the Navy’s “C” variant for use on aircraft carriers cost an average $109 million and $102.1 million, respectively.
“The F-35 remains a top priority, and we recently delivered the first TR-3 configured aircraft to the customer and expect deliveries for 2024 to meet our anticipated supply of 75-110 F-35s,” CEO Jim Taiclet said at a profit called last month.
Last month, the company said it would take between 12 and 18 months to deliver the dozens of F-35s parked because of the supply pause.
The F-35 stealth fighter jet has experienced delivery delays and production mishaps in the past.
(Reporting by Mike Stone in WashingtonEditing by Matthew Lewis)