By Giovanni de Briganti
PARIS --- Pricing of the Joint Strike Fighter has always seemed to be firmly rooted in fantasy, and the outgoing head of the JSF Program Office has again demonstrated just how divorced this program is from reality.
The “official” unit price quoted by Lockheed Martin for the JSF remains pegged at about $65 million, although even Lockheed recently admitted that it won’t know the exact price until 2012.
JSF Program Office (JPO) director Major General Charles Davis now tells Jane’s Defence Review that the US and F-35 partner countries “could save as much as USD 13 billion” by buying “about 150 extra aircraft between 2010 and 2015,” he says.
Davis’ figures mean that each of the 150 extra aircraft he’s offering would save $86.6 million, far more than the $65 million that the JSF is supposed to cost.
Does this mean a cash rebate of $21.6 million for each additional JSF bought?
If so, it would explain why Norway, the Netherlands and the UK remain enthusiastic JSF backers, despite all the contrary evidence that has emerged in recent years regarding the program’s viability.
By the way, in its latest JSF report GAO calculated that buying an additional 169 aircraft between FY2010 and 2015 would cost “up to $33.4 billion in additional procurement funding,” although they are the same extra aircraft that Davis sees as the source of $13 billion savings.
Simple arithmetic shows that each of these 169 additional aircraft would cost $197.6 million each.
So, in a nutshell, Davis says that each extra aircraft would save $86.6 million, but GAO says they would cost $197.6 million each, but Lockheed says unit cost is $65 million.
Now that Madoff funds are no longer available, here’s an idea for a great investment: buy JSF aircraft at Lockheed’s price, pocket the cash rebate from the JPO, and sell the aircraft on to the Pentagon at the GAO price:
$197.6M - $65M = $132.6M + $21.6M cash rebate = $154.2M net profit per aircraft.
Don’t have any spare cash? Then forget the aircraft, just buy JSF options, and settle for the $21.6 million cash rebate. For a 12-aircraft squadron, net profit is $259.63 million.
If you’re Norway, you could run a profit of $1,036.8 million (that’s $1.03 billion) on 48 aircraft. And Dassault might even pay you to take near-new Mirage 2000 Mk 9s off the U.A.E.’s hands so they can buy Rafales.
So the JSF finally starts to make financial sense – just as long as you don’t buy any.