Jane's Defense Weekly reported the Israeli air force is considering the acquisition of one squadron -- 18-24 aircraft -- if the delay in developing the F-35, also known as the Lightning II Joint Strike Fighter, is prolonged.
Alternatively, if the delays become too problematical, the IAF may postpone its procurement program and retain aircraft such as the F-16A, which it had planned to phase out once it received the initial batch of F-35s.
"Once we hear exactly what is happening with the program we'll be able to make a decision about what our procurement plans will be," Jane's quoted a senior defense official as saying.
The Pentagon announced March 11 that the F-35 program was a year-and-a-half behind schedule and would not be ready for operational deployment until 2015 instead of 2013.
It also disclosed that the cost of building the fifth-generation aircraft had risen from $50 million per plane when the program began in 2002 to a stratospheric $112 million. This was attributed to overruns, inflation and the increased cost of materials.
But some industry sources said the cost could swell to around $150 million per plane when revised estimates are completed in June.
The Israeli air force wanted to buy an initial batch of 25 F-35s -- enough or one squadron – with delivery in fiscal 2012, with an option for 50 more.
U.S Secretary of the Air Force Michael Donley said that because of the delays, the U.S. Air Force was considering extending the operational life of the F-16.
Boeing is already marketing an upgraded F-15 Eagle, with radar-evading stealth capability, as an alternative to the F-35. That could make it attractive to Israel, which has been balking at the delivery dates and the cost of the F-35.
Israel has 27 F-15I Raam and 102 F-16I Sufa ground-attack fighters, as well as 72 F-15 A/B/C/D and 224 F-16 A/BN/C/D fighter and strike variants.
The Ra'ams and Sufas comprise the air force's strategic long-range strike force which would carry the main burden in any pre-emptive Israeli strikes against Iran's nuclear infrastructure.
The Israelis have been deeply concerned about the ballooning price tag on the F-35. They have sought to limit this to around $100 million per plane but that seems to be out of reach as development costs continue to soar.
The Pentagon's top acquisitions official, Undersecretary of Defense Ashton Carter, disclosed in March that the Defense Department is planning to switch to a fixed-price contract rather than the current arrangement which fluctuates according to contractors' expenses.
It remains unclear at this stage how that will affect the Israelis' requirement for 75 aircraft, since the Pentagon's scale of costing the F-35 hinges primarily on the needs of the U.S. armed forces.
The Pentagon plans to buy 2,443 of the jets for the U.S. Air Force, Navy and Marine Corps at a listed cost of $323 billion.
Delays and further cost overruns could result in the Pentagon reducing the number of aircraft for these services, which would push up the price per aircraft even further than it is now.
The same goes for potential foreign customers, including the eight partners participating in developing the F-35 by lead contractor Lockheed Martin -- Australia, Britain, Canada, Denmark, Italy, the Netherlands, Norway and Turkey.
In terms of delivery, they would probably get the 730 F-35s they are expected to buy before Israel.
The Israelis have yet to sign any contract for the F-35. This has been held up in part because of another obstacle, Israel's demand its F-35s be equipped with indigenous electronic and weapons systems.
The Jane's Defense Weekly report said the Americans have approved the installation of Israeli electronic warfare systems, but no decision has been made concerning Rafael Advanced Defense Systems' Spice guided bomb unit and Python-5 air-to-air missile.
It had been hoped that a contract for the initial batch of F-35s could be wrapped up this year but that's looking increasingly unlikely in view of Lockheed Martin's development problems.