Lockheed Martin’s CEO said President Trump “asks excellent questions” about reducing costs of the F-35 joint strike fighter in a call Tuesday heralding the company’s successful 2016.
Marillyn Hewson, who has met with Trump to discuss the F-35 costs, said the new president just wants to make sure the American taxpayer is getting the best deal, but isn’t seeking to go after Lockheed’s profit margins.
“He asks excellent questions and he’s really focused on making sure that the cost comes down on the program,” Hewson said. “It’s not about slashing our profit, it’s not about our margins. When we have those discussions, it’s about how do we get the cost of the aircraft down today and in the future.”
The contract for the 10th lot of about 90 planes is expected “very soon.” Currently the F-35A, the conventional runway take-off version used by the Air Force and most international partners, costs about $100 million per plane and that number is expected to drop below that mark in the 10th batch. That’ll represent a 60 percent reduction from the first lot of aircraft as manufacturers learn as they go and increase efficiencies.
Trump has tweeted about the high cost of the aircraft and received a personal commitment from Hewson to reduce the price.
In total, Lockheed posted $47.3 billion in sales in 2016, about $7 billion higher than the previous year. Bruce Tanner, the chief operating officer, said most of that bump comes from a full year of Sikorsky, which Lockheed bought in November 2015, being part of the larger company.
Net earnings per share are also up to $12.38 in 2016, compared to $9.93 per share in 2015, and cash from operations was up about $100 million to $5.2 billion for the year.
Tanner said Lockheed Martin is predicting between $49.4 and $50.6 billion in sales for 2017.
Lockheed delivered 46 F-35 jets in 2016, including 16 in the fourth quarter of 2016, bringing the total number of delivered aircraft to 200. It’s predicting that it will deliver 66 planes by the end of this year.
Hewson said she doesn’t expect the continuing resolution for fiscal 2017, which runs through the end of April, to have any impact on 2017 predictions for sales, earnings or cash flows.
