U.K. Urges U.S. to Complete Approval for Lockheed F-35 Jets

  • Defense Minister says commitment remains firm for 138 jets
  • Fallon says there is no alternative to buying F-35B models

A Lockheed Martin Corp. F-35 performs during its flying display on the second day of the Farnborough International Airshow 2016 in Farnborough, U.K., on July 12.

Photographer: Simon Dawson/Bloomberg

The U.K. is pressing the Pentagon to wrap up negotiations over the next two contracts for the largest purchase of Lockheed Martin Corp. F-35 aircraft to date, a potential $15 billion deal, British Defense Secretary Michael Fallon said.

“We’ve been the ones chomping at the bit to get on with” the contracts, which would include nine short-takeoff and vertical-landing aircraft for the U.K., Fallon told reporters Wednesday at the British Embassy in Washington. There is no alternative aircraft that can operate off the country’s two new aircraft carriers being specially outfitted to launch and recover them, he said.

“We need to get on with that particular purchase,” Fallon said. “We’re the ones who need the aircraft.”

The Pentagon’s program office has been negotiating with Lockheed since last year over a ninth and 10th contract for production of an additional 149 advanced fighters. U.K.-based companies including BAE Systems Plc and Cobham Plc produce about 15 percent of each aircraft as part of work-share agreements.

Negotiating Terms

Lockheed warned Tuesday that current funding is “insufficient to cover the production process” as the negotiations with the Pentagon continue. As a result, the Bethesda, Maryland-based company has about $900 million of potential cash exposure and $3 billion in termination-liability exposure related to the contracts, officials said. The manufacturer said it’s currently negotiating final contract terms.

Fallon said the U.K. remains firmly committed to buying a total of 138 B-model F-35 jets in spite of foreign currency fluctuations caused by last month’s vote to leave the European Union. The so-called Brexit vote helped push the pound to a 31-year low against the dollar and sterling remains the worst performer among major currencies this year.

“Like any large commercial organization, we take certain precautions against fluctuation in the dollar-sterling rate,” but “I think it is a bit too early to say where that rate is going to settle down just on the basis of” the Brexit referendum, he said. “We’ve seen markets recover now.”