Lockheed Risks Funding Cuts If Problems Continue

Lockheed Martin has tried to reassure the public and its shareholders that recent problems with the F-35 Joint Strike Fighter's Pratt & Whitney engines are just growing pains, common in development of new aircraft. But those same shareholders recently heard a JP Morgan analyst warn those problems threaten the program's funding.

In a note to investors cited by Reuters, Joe Nadol wrote "While this failure in and of itself should not be viewed as a serious issue, the repeated delays that the program has experienced, particularly those due to the propulsion system, are collectively becoming a potentially damaging problem. We believe that F-35 development execution needs to improve quickly or the program could become a source of funds for other priorities."

The Air Force has said it needs $20 billion a year more than the Bush administration has proposed over the next five years, to keep its fleet up to date and ready despite the wear and tear of the wars in Iraq and Afghanistan.

The F-35 is planned for production of over 2,400 aircraft for the US Air Force, Navy and Marine Corps, and for US allies. The F-35 represents $300 billion to its builders over its 28-year lifespan, and is considered a major component in Lockheed Martin's profitability over the next 20 years.

Lockheed says the program remains on track, and its investors apparently were not panicked by Nadol's remarks. The stock's price has held steady near $107 per share for the past week, and Pratt & Whitney parent United Technologies has maintained at about $71 dollars.

FMI: www.jsf.mil