Lockheed Martin, the defense contractor building the F-35, expects no problem finding other buyers for the stealth fighters Turkey planned to purchase before the U.S. blocked sales to the country last week.
Replacing the production already under way in the nation – which straddles the border between Europe and Asia – is more complicated, but the company has a plan to handle it, CEO Marillyn Hewson said Tuesday.
“It is a pretty fluid situation,” she said on a conference call with analysts. “We’re working to wind down the Turkish industry’s involvement,” with a plan to complete the shift by March 2020. “This has been percolating for a while. We addressed it early, and have been working closely with the Pentagon.”
U.S. defense officials warned Turkey in June that unless President Recep Tayyip Erdoğan canceled his purchase of an S-400 missile defense system from Russia that the NATO member would be pushed out of the group building and operating what has become the most expensive weapons system in U.S. history.
Turkey will lose more than $9 billion in projected work over the fighter’s life, Ellen Lord, underseceretary of defense for acquisition, said in a news briefing on July 17. More than 900 parts for the F-35 were produced in Turkey, and more than $1 billion in assigned work was spread across 10 suppliers in the country, she said.
“Turkey cannot field a Russian intelligence collection platform in proximity to where the F-35 program makes, repairs and houses the F-35,” Lord said. “Much of the F-35’s strength lies in its stealth capabilities, so the ability to detect those capabilities would jeopardize the long-term security of the F-35 program.”
Despite the loss of Turkey, Lockheed is on track to deliver 131 of the jets this year, and to reduce the price below a longstanding target of $80 million each, Hewson said Tuesday. While Turkey had planned to purchase as many as 100 of the jets, it was only slated to receive eight a year in the near future.
Poland, she noted, has already expressed interest in buying 32 of the jets and several countries have indicated they want more.
The largest U.S. defense contractor, Lockheed trumped rival Boeing for the right to develop the F-35 in 2001, the first year of George W. Bush’s presidency. The stealthy, supersonic plane was designed to replace aging fighter jets such as the Air Force’s F-16s and the Navy’s F/A-18s while deftly handling both precision air-to-ground strikes and midair combat with other jets.
Development of the aircraft, which already carries an expected price tag of more than $406 billion, hasn’t always run smoothly, however. Members of Congress have criticized rising costs and delays in the program, and the Defense Department temporarily blocked deliveries before resolving a dispute over repairs in May 2018.
Higher production of the stealth fighter helped drive sales in Lockheed’s aeronautics division 15% higher in the first half of this year, to $11.1 billion, the Bethesda, Maryland-based contractor said in a statement. Companywide profit in the three months through June climbed 22% to $1.42 billion, or $5 a share.
Lockheed climbed 17 cents to $357.80 in New York trading on Tuesday. Its shares have risen 37% this year.
