Lockheed Martin to accept F-22 termination decision
A top Lockheed Martin executive says the company will not oppose the Department of Defense's proposal to halt F-22 production. The company stands to lose production lines for the F-22 and the VH-71 presidential helicopter under fiscal year 2010 budget proposals announced by Secretary of Defense Robert Gates on 6 April.
"We're disappointed by the decisions, but we'll accept those and go on," says Lockheed chief financial officer Bruce Tanner. Its revenues are likely to continue to grow as a result of proposals by Gates to increase other programmes, such as the F-35 Joint Strike Fighter, Littoral Combat Ship and terminal high-altitude area defence system, he told investment analysts on 21 April.
Tanner also says that closing the F-22 production line after building 188 operational aircraft for the US Air Force, including two crashed jets, may not necessarily spark mass layoffs.
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Lockheed and its suppliers had made potential job losses a major theme of their campaign to extend production of the fighter, claiming that 95,000 jobs nationwide would be at risk if the programme were allowed to phase out in the first quarter of 2012.
But Tanner now says F-22 losses could be offset by a "significant up-tick in production for the C-130J, as well as a significant up-tick in production for C-5M". However, "it remains to be seen whether those things align perfectly", he adds.
Lockheed has already announced plans to roughly double C-130J production by the end of this year, and the C-5M is transitioning to full-rate production. Both programmes are based in Marietta, Georgia, where the F-22 is assembled.
The F-22 programme is also in line to receive up to billions of dollars for modifications and upgrades over the next several years. The USAF already pays Lockheed about $1 billion annually to sustain the F-22 fleet, and Tanner says this amount is expected to grow significantly over the next few years. However, it is unlikely to equal the roughly $3 billion budget to build 20 F-22s each year.
Finally, the USAF must pay Lockheed an unspecified amount to cover the costs of shutting down its production line, which will be amortised over the final four F-22s expected to be purchased.
Tanner meanwhile says Lockheed remains unaware of the details of a proposed F-35 programme acceleration announced by Gates. "A multi-billion [dollar] funding increase is obviously something we notice as well," Tanner says. "But it's not entirely clear to us without the details of the budget exactly what that is for."
