The Pentagon’s fleet of F-35 fighter jets may not receive the full, combat-ready version of the TR-3 upgrade this year, Lockheed Martin executives acknowledged today.
The upgrade, formally called Technology Refresh-3, was originally supposed to be ready in April 2023, but software-development problems have delayed the effort multiple times. Those delays drove the Pentagon to halt acceptance of new F-35s for a year, a pause that ended in July. The upgrade will equip the jets with the extra computing power needed for Block 4 improvements to sensors and weapons.
Lockheed still has work to do on TR-3 related to “mission system integration” and “improving system stability overall.” While the company expects to hit some of these milestones this year, “for purposes of financial modeling, we would expect this to bleed into 2026,” Chief Financial Officer Jay Malave said during the company’s fourth-quarter earnings call today.
As of last year, Lockheed executives hoped that the full TR-3 combat capability would be ready this spring, but neither the F-35 Joint Program Office and Lockheed were able to provide a firm delivery date.
“Ultimately, the declaration of full combat capability is one that is left with our customer, and so we’ll be coordinating with them and working with them on that,” Malave said. “But what I can tell you is that we’re pleased with the progress we’ve made thus far, and the team is working at a pretty good pace here with our supplier partners on improving the mission system capability and as well as improving overall system stability.”
In the meantime, the Pentagon will continue to receive TR-3 jets with a “truncated” version of the package until the full, combat-capable version is ready. Originally, the Pentagon had withheld $5 million per jet from Lockheed until the full upgrade was complete. The department has since reduced that withholding by $1.2 million a plane in light of incremental progress by Lockheed, according to a statement from the Joint Program Office.
Lockheed delivered 110 jets in 2024, including new jets off the production line and previously parked TR-3 jets. This year, the company expects to deliver 170 to 190 jets—again, more than it builds, as it continues to clear the backlog of parked jets, company CEO Jim Taiclet said today.
Lockheed also expects that a definitized contract for next production lot of F-35s, lot 18, will come in the first half of this year, Taiclet said. The Pentagon awarded Lockheed a $11.8 billion contract for Lot 18 in December, as they finish up the final agreement.
The deal will be finalized under the new administration, and President Donald Trump may have an interest in lowering the cost of the F-35—similar to how he intervened in 2017. Additionally, Elon Musk, a key adviser of Trump and leader of an effort to cut government waste, has publicly criticized the F-35 program.
Asked about the recent noise surrounding the F-35, Taiclet remained confident they’ll continue to build 156 jets per year, partly because China is churning out its J-20 fighter jet and decreasing production would be “adverse to maintaining an effective deterrent to them.”
“There are some very capable people coming into the administration. They understand deterrence theory. The last thing I think this president and administration would want is to create a period of vulnerability with any of our major adversaries in the next few years. So I feel really confident about F-35 production,” Taiclet said.
Lockheed also announced during its earnings call that it took $2 billion in losses in 2024, driven by two classified programs. The company reported a $1.4 billion loss on a missile-and-fire control program and $555 million on an aeronautics program for the year.
For the missile-and-fire control program, the company expects the program’s options will be exercised at a loss “over the next several years,” but turn a profit around 2028.
And for the classified aeronautics program, the company said it conducted a comprehensive review of the program, which involves “highly complex design and systems integration,” which identified higher than expected engineering costs, driving the losses in 2024.
