CORRECTED - UPDATE 2-Fixing F-35 program seen critical for Lockheed
(Corrects name of Pratt & Whitney official throughout to Bill Gostic, instead of Costic) (Adds interview with Pratt & Whitney)
WASHINGTON, Feb 11 (Reuters) - Lockheed Martin Corp (LMT.N) must improve its execution of the F-35 Joint Strike Fighter program, or risk seeing its massive funding being siphoned off to pay for other weapons programs, analysts said on Monday.
Valued at $299 billion over the 28 years, the F-35 program is the most expensive weapons program in U.S. history, with yearly spending levels set to increase as the fighter jet program gears up for full-rate production in the next decade.
The Pentagon is developing versions of the F-35 for the U.S. Air Force, Marine Corps, Navy and for export.
"We believe that F-35 development execution needs to improve quickly or the program could become a source of funds for other priorities," Joe Nadol at J.P. Morgan Securities wrote in a note to investors on Monday.
"We view improving execution on this program as the highest priority for LMT management in the coming months, as it is by far and away the most important growth driver for the company over the next five to 10 years," he said.
Nadol said a recent failure with the F135 engine being developed by Pratt & Whitney, a unit of United Technologies Corp (UTX.N), and other delays were "collectively becoming a potentially damaging problem."
Lockheed has downplayed the seriousness of the engine issue, saying such technical issues are common early in the development of a new aircraft program, although it conceded a potential delay in delivery of the Pratt & Whitney engine.
"The F-35 program remains on track, and we continue to work aggressively to manage production cost and schedule challenges," Lockheed spokesman John Smith said.
The engine problem is the same one first reported last year, and involves blades in the third stage of the F135 engine that crack due to vibrations, said Bill Gostic, manager of F135 programs for Pratt & Whitney.
He said Pratt had already begun producing new components to reduce the vibrations, and was screening all F135 flight test engines. Tests of the initial configuration would be done by April, and by July of the redesigned configuration, he said.
The problem occurred again on Feb. 4 when a second blade cracked and broke during testing, damaging other engine parts. Pratt was taking steps to ensure that testing from now on identified cracked blades, but did not break them, he said.
"We are committed to resolving this issue and preventing issues in the future," Gostic said, adding that Pratt already lost some award fees over the engine issues after its "grade" was docked last year. He gave no details.
The Short Takeoff Vertical Landing (STOVL) version of the F-35 is still scheduled for a first flight in May, despite the engine issue, which is more likely to occur when the plane's vertical propulsion system in use, Lockheed's Smith said.
Initial test flights would use only the conventional takeoff and landing mode, while tests involving a short takeoff and vertical landing would be delayed by several months until early 2009, due to a potential delivery delay, he said. Continued...
