Lockheed Martin Corporation LMT has resumed deliveries of the F-35 jets to the U.S. military after a months-long pause, but the U.S. government is withholding the final $5 million payment per jet until a long-delayed technology upgrade, known as Technology Refresh 3 (TR-3), is fully implemented.
The delay in the TR-3 upgrade has prompted the U.S. government to withhold a portion of the payment for each jet.
The TR-3 upgrade includes essential software and hardware improvements, such as enhanced displays, increased computer memory, and improved processing power, all critical to the jet’s combat capabilities.
Although the deliveries have resumed, the withheld funds will significantly impact Lockheed Martin’s profit margins, the Reuters report notes.
The company, which derives 27% of its sales from the F-35 program, is under pressure to resolve the issue.
The report adds that Lockheed Martin indicates that it may take several more months to complete the necessary upgrades.
Despite the current challenges, Lockheed Martin plans to deliver approximately 100 F-35 jets to the U.S. military this year, with a target of over 150 deliveries in 2025.
The most common F-35A variant costs an average of $82.5 million per unit for deliveries scheduled in 2023, 2024, and 2025.
The F-35B, designed for short takeoff and landing, and the F-35C, optimized for aircraft carriers, are priced at $109 million and $102.1 million, respectively.
On a recent earnings call, Lockheed Martin CEO Jim Taiclet emphasized the importance of the F-35 program, noting that the first TR-3-configured aircraft had been delivered and that the company expects to meet its 2024 delivery goals of 75 to 110 jets.
However, the company has acknowledged that it could take 12 to 18 months to deliver the backlog of F-35s that were parked due to the delivery pause.
The F-35 program, known for its stealth capabilities, has faced multiple delays and production issues over the years, but it remains a top priority for Lockheed Martin and the U.S. military.
Price Action: LMT stock was trading higher by 0.20% to $568.01 at the last check on Friday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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Photo courtesy: Lockheed Martin
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