President-elect Trump criticized the building of the F-35 fighter jet for its cost overruns and delays Monday, and promised to save billions when he’s president on the program.
“The F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th,” Trump tweeted.
The F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th.
— Donald J. Trump (@realDonaldTrump) December 12, 2016
The F-35 is the largest and costliest development project in Department of Defense history. Originally, Lockheed Martin was supposed to deliver more than 1,000 F-35s by the end of the year, but only 179 will be delivered.
The Pentagon announced last month that the majority of planes won’t be delivered until 2018, which could lead to another $1 billion in cost overruns.
The total cost of the project is expected to be about $400 billion over the entire course of its development.
Still, Byron Callan, managing director of Capital Alpha Partners, said it’s incorrect to say the program’s costs are out of control.
“Yes, there are affordability issues on the F-35 and there may be alternative ways to deliver capabilities offered by the F-35 through other platforms or weapons. However, unit prices have been declining, and the program has stabilized in recent years,” Callan said.
Callan also urged investors not to panic about the program’s future over a single tweet. He noted that the president-elect likely doesn’t know the full scope of the joint strike fighter acquisition and what the consequences would be if it were altered, especially given the age of the current U.S. fighter jet fleet and the international participation in the F-35.
“We strongly doubt that Trump has been fully informed of the F-35 program or alternatives to modernize U.S. tactical aircraft inventories. As well, we strongly doubt that he has been informed of the unique international nature of the program,” Callan said.
It appeared Trump’s tweet may have had an impact on the pre-trading price of Lockheed Martin’s stock. The price of a share of Lockheed Martin dropped 2.5 percent in the pre-trading hours.
Jeff Babione, the executive vice president and general manager of the F-35 program at Lockheed Martin, touted the “incredible value” provided by the F-35 at a ceremony in Israel on Monday that marked the delivery of the first planes to the country and said the company is investing in reducing sustainment costs during the lifetime of the aircraft.
“We welcome the opportunity to address any questions the president-elect has about the program. It’s an amazing program,” Babione said. “We project the price of the aircraft will be $85 million in the 2019 -2020 timeframe. When we get to that price, the F-35 will be less expensive than any fourth-generation fighter in the world. And it will be the premiere fifth-generation fighter.”
A Congressional Budget Office report out this month found that halting the F-35 program and buying more F-16 and F/A-18 jets could save $29 billion over the next 10 years. But that would mean less capability for the U.S. military than what the most advanced fifth-generation fighters would provide, and Trump said in a Washington Post editorial board this summer that he is not a fan “structurally” of Boeing’s F/A-18C Hornet either.
The tweet marks the second time in a week that Trump has taken on a major defense acquisition program over Twitter. Last week, he threatened to cancel Boeing’s program to build a new Air Force One over cost concerns.
In response to that tweet, David Melcher, the president of the Aerospace Industries Association, urged companies not to overreact to a single tweet.
“What is tweeted today is not necessarily going to be the policy of tomorrow,” Melcher said this month.
