Pentagon and Lockheed Finalize $24.3 Billion F-35 Deal for Nearly 300 Jets, But Engine Questions Remain

The F-35 Joint Program Office (JPO) and Lockheed Martin have finalized one of the largest defense aviation contracts in recent years, securing production Lots 18 and 19 of the fifth-generation fighter. The contract covers 296 aircraft at a total cost of $24.29 billion, averaging $82.4 million per jet across all variants and customers.

The announcement, confirmed on 29 September, finalizes an earlier $11.8 billion agreement reached in December 2024 and adds a new $12.5 billion modification for Lot 18 and Lot 19. Deliveries of the new aircraft are expected to begin in 2026, with Lot 20 negotiations already in planning under a multiyear contract framework.

Cost, Inflation, and Pricing Strategy

The contract type is described as “fixed-price incentive (firm-target), firm-fixed-price, cost-plus-fixed-fee”, giving both sides some balance in risk-sharing. While the cost per jet has risen compared to earlier deals, Lockheed Martin insists the increase remains below the rate of inflation.

A JPO spokesperson highlighted that although “unit recurring flyaway costs increased, the total settlement price is beneath relevant inflation indices increases.” This means that when inflation is factored in, the new aircraft remain at cost levels comparable to earlier production Lots 15–17.

Importantly, the deal does not include the F135 engines, manufactured by Pratt & Whitney (RTX), which will be contracted separately. Engines have become a sensitive subject in the program, with ongoing debates about upgrading the current F135 design versus investing in next-generation propulsion under the Adaptive Engine Transition Program (AETP).

Allocation of Aircraft

The Lot 19 breakdown shows a wide distribution of jets among U.S. services, partner nations, and foreign military sales (FMS) customers:

• U.S. Air Force: 40 F-35As

• U.S. Marine Corps: 12 F-35Bs and 8 F-35Cs

• U.S. Navy: 9 F-35Cs

• International partners: 13 F-35As and 2 F-35Bs

• FMS customers: 52 F-35As and 12 F-35Bs

This reflects the global demand for the aircraft, which now serves as the backbone of multiple allied air forces. To date, more than 1,230 F-35s are in service with 12 nations, and the fleet has accumulated over one million flight hours.

Strategic Implications and Analysis

The new F-35 contract is not just a matter of numbers and delivery schedules—it carries deeper significance for U.S. and allied airpower. The decision to commit nearly 300 aircraft in a single package reflects sustained confidence in the program despite years of criticism over costs, delays, and technical hurdles. It underscores the reality that the F-35 has become the cornerstone of Western air dominance, a platform that the Pentagon and partner nations see as irreplaceable in the evolving strategic environment.

Another key dimension of this deal lies in its relationship with global inflationary pressures. Defense procurement is notoriously vulnerable to cost escalation, yet the F-35 program has managed to keep price increases below the broader rate of inflation. This achievement reflects not only the maturity of Lockheed Martin’s production line but also the economies of scale created by multinational demand. In effect, the program demonstrates how modern defense industries can navigate economic turbulence without sacrificing output or affordability.

Equally important is the geopolitical weight carried by the F-35 network. The program has moved far beyond being an aircraft sale; it has become an international defense architecture in its own right. Nations that buy into the F-35 are effectively buying into a shared ecosystem of training, intelligence, logistics, and digital connectivity that binds their air forces more closely with those of the United States and its allies. In regions such as Europe and the Indo-Pacific, this interdependence enhances deterrence and signals collective resolve against rivals like Russia and China.

Yet, challenges remain. The unresolved issue of the Pratt & Whitney F135 engines—to be contracted separately—continues to raise questions about future propulsion upgrades and whether the Adaptive Engine Transition Program will reshape long-term requirements. Operational costs also remain under scrutiny, as the Pentagon continues to pressure Lockheed to reduce sustainment expenses, which remain higher than fourth-generation fighters. At the same time, the F-35’s much-needed Block 4 modernization has faced delays, potentially complicating the integration of advanced weapons and sensors. Added to this are the vulnerabilities of a global industrial base stretched across more than 1,800 suppliers, a network that is not immune to supply chain shocks or geopolitical disruptions.

Taken together, the Lot 18–19 contract is far more than a procurement milestone. It represents a strategic signal to adversaries and allies alike. To Russia and China, it reinforces the determination of the U.S. and its partners to sustain fifth-generation superiority even as competitors push their own advanced designs. To allies and buyers, it reassures them that the program has long-term stability, with predictable deliveries and strong political backing. And to the defense industry, it shows that multinational fighter programs, if managed carefully, can strike a balance between cost control and industrial resilience.