Image: F-35 Strike Fighter Production Depends on Pentagon, Lockheed Talks

F-35 Strike Fighter Production Depends on Pentagon, Lockheed Talks

Wednesday, 24 Jul 2013 08:15 AM

By Clyde Hughes

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New F-35 strike fighter jets could find their way to the military and several other countries soon if negotiations between the Pentagon and Lockheed Martin remain optimistic, said the company's top administrator Tuesday.

Marillyn Hewson, Lockheed's chief executive said progress has been made with the Pentagon for the company to produce two batches of the F-35 strike fighter jets, according to Reuters.

"We've been very open and transparent with our data and I think the negotiations are going well," Hewson told Reuters and other reporters on Tuesday. "We've making good progress and we hope that we'll be able to close in the near term."

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Lockheed is building F-35 strike fighters for the U.S. military and eight countries, including Britain, Australia, Canada, Norway, Turkey, Italy, Denmark and the Netherlands. Israel and Japan have also ordered the jet, noted Reuters.

Hewson told the Financial Times in May that the sequester, across-the-board spending cuts by the U.S. government, could inflate the cost of the strike fighters for everyone.
The spending cuts took effect March 1, slashing about 10 per cent in each item in the defense department's budget.

"We know they do recognize that the reduction in the number of aircraft (under construction at any time) can drive up unit costs," said Hewson. "They’re working in whatever way they can to minimize that impact."

Bruce Tanner, Lockheed's chief financial officer, told Reuters that the F-35 program accounted for about 15 percent of the company's revenues, and that percentage was expected to expand.

He said that current deals would add $4.5 billion to $5 billion to the company's books when they are completed; a move he said he expected in the third quarter, not including funding already received for the strike fighters.

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Reuters reported that the F-35 is the Pentagon's biggest weapons program, but the military had been pushing for lower prices to ensure the program's future because of the sequestration and other calls for cuts in the Pentagon's budget.

Air Force Lt. General Christopher Bogdan told company officials he wanted to reach agreement on the contracts by the end of July and extra time to finalize the details.

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