U.S. slowdown on F-35 jet buy to raise cost: Lockheed

OSLO Tue Feb 14, 2012 10:58am EST

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OSLO (Reuters) - A U.S. plan to drag out purchases of the F-35 Joint Strike Fighter jet will increase the total cost paid by the United States and international allies, Lockheed Martin (LMT.N) said on Tuesday.

"It will raise the overall average cost of the total procurement of all the airplanes bought," Tom Burbage, head of Lockheed Martin's F-35 program, said after the Pentagon announced it would slow procurement of the fledgling radar-evading aircraft.

The Pentagon on Monday confirmed plans to postpone production of 179 F-35s over the next five years to save $15.1 billion, including $1.6 billion by funding 13 fewer aircraft in fiscal year 2013.

It was the third program restructuring in recent years as costs escalate and timetables slip in the biggest U.S. weapons program ever.

Burbage told Reuters the average cost would "go up somewhat" but that the price for particular buyers or time frames would not necessarily rise. He was in Oslo to discuss Norway's proposed purchase of up to 56 F-35s.

The United States still plans to buy 244 jets in the next five years and 2,443 altogether, but the new delay could prompt allies who are helping fund the program to rethink their own tentative orders of more than 700 aircraft.

Norwegian Deputy Defense Minister Roger Ingebrigtsen said Norway's purchase plan would be firmed up with little change and presented to the parliament for approval by early April.

Before that, he said, he would attend a gathering of international buyers called by Canada ahead of a formal meeting in mid-March where they are to outline firm order plans.

"It is a kind of fact-finding meeting," Ingebrigtsen said. "What is the price in Canada and what is the price in Norway? Why do we sometimes see different numbers for different countries?"

Burbage said the price foreign air forces pay to the U.S. Defense Department for their F-35s was volume dependent so that the U.S. slow-down "changes the dynamics of the cost equation."

"When we don't see an increase in volumes at the rate we anticipated, we don't continue to reduce costs at the rate we anticipated," he said, adding that he saw volumes rising again in about two years as large international purchases kick in.

Britain, the biggest outside contributor to F-35 development, has said it would wait until 2015 to decide how many jets to buy.

Turkey has halved its initial delivery request for four planes, part of a much larger order that it has not yet reduced, and Italy has hinted at possible "significant" reductions from its tentative 131-jet order.

Burbage said none of the international partners had scaled back their formal commitments yet.

"We still have all the countries engaged at the same numbers where we started, and we see no restriction in our way to delivering planes to the Norwegian air force on the schedule that they desire," he said, promising those deliveries in 2018.

Last month Norway's Defense chief said the country might make do with 52 F-35s instead of 56 as originally proposed at an assumed total price of 61 billion Norwegian crowns ($10.7 billion) in real 2011 currency.

($1 = 5.7138 Norwegian krones)

(Reporting by Walter Gibbs; Editing by Jodie Ginsberg)

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Comments (1)
E_L_P wrote:
Not mentioned is that there are delays to the F-35 program because of significant technical defects. http://goo.gl/noms2

Feb 14, 2012 2:29pm EST  --  Report as abuse
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