Israel will be first to buy F-35

Israel signed a contract to purchase 20 F-35 stealth fighters on Thursday, and will be the first country to take delivery of the jets in 2015.

On October 7, Israel’s Ministry of Defense Director General (Maj. Gen. Ret.) Udi Shani signed the Letter of Offer and Acceptance for the procurement of the F-35 aircraft. The acquisition of the planes will be funded by U.S. military aid, over eight years. The new fighter will be provided along with an integral support package, sustaining the aircraft through its service life. The decision has yet to pass the approval of the Israeli government. The purchase will be funded by U.S. military aid to Israel. Israel originally planned to initially buy of 25 aircraft. The current decision trims this initial buy by five aircraft. According to Israel MOD sources, the flyaway cost of these aircraft will be $96 million, but this cost reflects only the net price of the platform.

The expenses including the preparation of the new squadron, initial infrastructure, logistical and support package is expected to eventually exceed $150 million per plane. Given the additional integration cost of locally developed Israeli systems, planned for integration into this highly complex aircraft, the cost of future batches is expected to rise significantly for the fully equipped F-35Is in following years. Israel’s future plans are to buy 75 F-35Is. Furthermore, for these enhancement and adaptations Israel may have to rely on local currency funding, unlike the aircraft acquisition program that will be funded entirely by the annual U.S. aid amounting over $2 billion per year.

Israeli pilots will begin training on the new aircraft by 2014 and the first aircraft are expected to arrive in Israel by 2015. The first squadron could become operational in less than two years at one of the Israel Air Force (IAF) southern air bases.

The initial F-35I will represent standard F-35A models. However, the F-35I acquisition agreement is opening opportunities for the installation of Israeli systems in future production batches. These opportunities will also open the aircraft for marketing Israeli systems to other air forces, reflecting an opportunity worth several billions of dollars for the local industry. Gen. Udi Shani has stated that the acquisition agreement also includes a framework for buyback purchasing from the Israeli industry worth $4 billion. The introduction of Israeli components, systems and technologies into the world’s newest fighter plane will also open a potential market opportunity worth about $5 billion among the aircraft users.