WASHINGTON Japan on Friday signed a formal agreement with the United States to buy an initial four F-35 fighters built by Lockheed Martin Corp and other equipment for 60 billion yen ($756.53 million), a company spokesman said.
The letter of offer and acceptance, which was signed in Japan, includes four conventional takeoff variants of the F-35 fighter at a cost of 10.2 billion yen ($128.61 million) each, a slightly higher price than the 9.9 billion yen ($124.83 million) than Japan initially budgeted to spend.
But the cost of the two simulators and other equipment dropped to 19.1 billion yen ($240.83 million) from the anticipated level of 20.5 billion yen ($258.48 million) so the overall price remained at 60 billion yen.
The signing was good news for Lockheed and the F-35 program, which is looking to orders from Japan and other countries to help maintain economical production rates at Lockheed's main F-35 plant in Fort Worth, Texas, despite cuts in U.S. orders.
Japan, which announced in December that it plans to buy a total of 42 F-35 fighters, had warned Washington in February that it might cancel its orders if the price of the new jets rose or deliveries were delayed due to the Pentagon's plan to postpone its own orders for 179 F-35s over the next five years.
Japan's continued participation in the program could also be significant for Lockheed's prospects in a competition for 60 F-35 fighters in South Korea, analysts said.
The main subcontractors on the program include Northrop Grumman Corp, Britain's BAE Systems and engine maker Pratt & Whitney, a unit of United Technologies Corp.
Lockheed is developing the F-35 Joint Strike Fighter for the United States and eight partner countries -- Britain, Australia, Canada, Italy, Turkey, the Netherlands, Denmark and Norway. It is the largest U.S. weapons program, with an estimated development and procurement cost of $396 billion over the next two decades.
Lockheed shares were trading over $2.01 or 2.4 percent higher on the New York Stock Exchange early Friday.
($1 = 79.3100 Japanese yen)
(Reporting By Andrea Shalal-Esa; editing by Sofina Mirza-Reid)