Lockheed hits 2017 F-35 delivery target despite production hiccups

Britannia Life Sciences

18/12/2017 09:00

By Mike Stone 
    Dec 18 (Reuters) - Lockheed Martin Corp  LMT.N  said that it 
hit its 2017 target to deliver 66 F-35 fighter jets to the U.S. 
and its allies last week, despite production problems as the 
defense contractor built 40 percent more jets this year. 
    In September and October, the U.S. Defense Department halted 
shipments of F-35s for 30 days after a production error allowed 
corrosion to form around fasteners attaching body panels to the 
airframe.  urn:newsml:reuters.com:*:nL2N1N718O 
    It was the latest of several production issues that have 
arisen in the Pentagon's most expensive weapons program. 
    The F-35 is key for Lockheed, accounting for about a quarter 
of its total revenue. During the third quarter, sales at 
Lockheed's aeronautics business increased 14 percent to $4.7 
billion, pulled higher by F-35 sales.  urn:newsml:reuters.com:*:nL4N1MZ4HE 
    "I definitely see growth opportunities for the F-35 program 
and expect the program to grow much like the F-16 did, as 
countries look to recapitalize their fighter fleets," said Jeff 
Babione, the head of Lockheed's F-35 program. 
    The governments of Belgium, Finland, Germany, Spain, 
Switzerland, the United Arab Emirates and others have been 
eyeing a purchase of the stealthy jet as potential new 
customers.  urn:newsml:reuters.com:*:nL3N1GG09O urn:newsml:reuters.com:*:nL1N1O520N urn:newsml:reuters.com:*:nL8N1OB5DJ urn:newsml:reuters.com:*:nL8N1NG5FT     
    In Canada, Liberal Prime Minister Justin Trudeau campaigned 
in 2015 on a promise not to buy the F-35 fighter, saying it was 
too expensive. 
    But last week, in a move that could ultimately benefit 
Lockheed, Trudeau's government scrapped plans to buy 18 Boeing 
Co  BA.N  Super Hornets and made clear the company would not win 
a contract for 88 jets unless it dropped a trade challenge 
against Canadian planemaker Bombardier Inc  BBDb.TO . 
 urn:newsml:reuters.com:*:nL1N1OC150 
    The U.S. and its allies are negotiating an annual purchase 
of a batch of 141 planes. As of Friday, they had more than 265 
of the jets already flying.  urn:newsml:reuters.com:*:nL2N1HE14O  urn:newsml:reuters.com:*:nL8N1JF0SH 
    In order to meet its planned growth to a fleet of more than 
3,000 jets worldwide, the company has hired more than 1,300 of a 
planned 1,800 workers at its Fort Worth, Texas factory. There 
are also assembly facilities in Japan run by Mitsubishi Heavy 
Industries  7011.T  and Italy, run by Leonardo  LDOF.MI . 
    The company is scheduled to deliver about 90 jets next year 
and the Bethesda, Maryland-based weapons maker aims to nearly 
triple annual production to more than 160 jets in 2023. 
    Lockheed shares hit an all-time high of $323.38 on Friday, 
capping an almost 250 percent run over the last five years and 
showing that investors expect steady and strong profit growth 
from the world's biggest defense contractor.      
     
    PRODUCTION DELAYS   
    Despite the consistent growth, the F-35 has been widely 
criticized for being too expensive, including by U.S. President 
Donald Trump and other U.S. officials, who have also pointed to 
numerous production delays and cost overruns.  
    A quarter of the operating F-35 fleet was temporarily 
grounded this year because of problems with pilots' oxygen 
supplies.  urn:newsml:reuters.com:*:nL1N1J911N urn:newsml:reuters.com:*:nL1N1E70QM  
    The U.S. Government Accountability Office also published a 
report this year detailing a shortage of spare parts that could 
plague the F-35 program for several years.  urn:newsml:reuters.com:*:nL2N1N12I8 
    The supply chain is already working at peak capacity. 
    Lockheed, the prime contractor, and its partners, including 
Northrop Grumman Corp  NOC.N , United Technologies Corp's 
 UTX.N  Pratt & Whitney and BAE Systems Plc  BAES.L , have been 
working on building a more cost-effective supply chain. 
 
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
Lockheed Martin's F-35 fighter jets     http://tmsnrt.rs/2jNBtPG 
Profile graphic on Lockheed's F-35 Lightning     http://tmsnrt.rs/2jPCQv8 
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 (Reporting by Mike Stone in Washington, DC, Editing by Rosalba 
O'Brien) 
 ((mike.stone1@thomsonreuters.com; https://twitter.com/MichaelStone; 
 +1 646 223 6228, ; Reuters Messaging: 
mike.stone1.reuters.com@reuters.net)) 
 
Keywords: USA LOCKHEED/F35