Canada Considers Canceling F-35 Purchase from Lockheed Martin

The Government of Canada is currently re-evaluating its agreement to acquire 88 F-35 fighter jets from Lockheed Martin Corporation (NYSE: LMT), a deal valued at $13 billion. This reconsideration stems from ongoing trade tensions between the United States and Canada, which have put the contract at risk. Canadian Defense Minister Bill Blair has indicated that the country is now exploring potential alternatives to the F-35 aircraft amidst the strained diplomatic relations.

The F-35 program is a significant financial commitment for Canada, with projections estimating the program’s life cycle cost, including maintenance and upgrades, to surpass $50 billion. This massive investment is intended to replace Canada’s aging fleet of CF-18 fighter jets, many of which have been in service for over four decades. The CF-18s' replacement is deemed crucial for the country's defense capabilities, thus adding pressure on decision-makers to finalise a solution.

Globally, Lockheed Martin has received approximately 3,500 orders for the F-35, with around 1,100 currently in service. The F-35 is widely regarded as one of the most advanced military jets available today owing to its fifth-generation stealth fighter capabilities.

Amid this uncertainty, analysts have suggested that Canada could potentially pivot towards European-made fourth-generation fighter jets. Options being considered include the Eurofighter Typhoon, produced by Airbus, and the Gripen, manufactured by Saab. These alternatives might offer a feasible solution, given the current geopolitical and economic conditions affecting the bilateral relationship between Canada and the United States.

While Lockheed Martin's stock has seen a decline of 3% in 2025, it maintains a Moderate Buy consensus rating from Wall Street analysts. This rating comes with a price target, indicating a potential upside of approximately 13.90%.

As Canada continues to assess its defense procurement strategy, the decision on whether to proceed with the F-35 purchase will likely have significant implications for both Canadian military capabilities and Lockheed Martin's business dealings with international clients.