* ‘Brand-new phenomenon,’ Lockheed says
* Partner countries said sticking to purchase plans
* Company agrees to changes to keep program on track
* Lockheed shares up 1 cent at $78.20
WASHINGTON, Dec 3 (Reuters) - Lockheed Martin Corp (LMT.N) said Thursday that its multinational F-35 fighter aircraft, the Pentagon’s costliest acquisition program, was performing surpassingly well in early test flight.
“We have never seen, ever, success in terms of avionics stability and maturity this early in a program,” said Ralph Heath, executive vice president of the company’s aeronautics business unit.
Lockheed, the Pentagon’s No. 1 supplier by sales, projects it will sell up to 4,500 F-35s worldwide to replace its F-16s and 12 other warplanes for 11 nations initially. The United States plans to spend about $300 billion over the next 25 years to buy 2,443 F-35s.
Heath said about three-quarters of the jets returning from test flights were ready to go again, a standard he said normally applied to production models, not test planes.
“So it really is a brand-new phenomenon,” he told a webcast Credit Suisse aerospace and defense industry conference in New York.
The test flight program is far behind schedule. The development program overall is facing a potential $16 billion shortfall through 2015, according to independent studies commissioned by the Pentagon.
Lockheed Martin agrees with initiatives, floated publicly last week by the Pentagon’s chief arms buyer, aimed at getting the program back on track, said Bruce Tanner, the aeronautics unit’s chief financial officer.
Tanner said the company had discussed with Ashton Carter, the arms buyer, plowing some of Lockheed’s future award fees into putting more aircraft into the test program and speeding development of the mission software.
“We support Dr. Carter with that objective,” Tanner told the conference. He did not make clear how much this might cost in terms of foregone profits. Neither the company nor the Pentagon’s F-35 program office responded immediately to questions about this.
Carter told reporters on Nov. 23 that he wanted Lockheed to share the cost of preventing F-35 cost overruns and schedule slips.
Lockheed has a “cost-plus” development contract, meaning the government typically picks up the bill for any cost overruns.
Eight countries have helped the United States finance three variants of the F-35: Britain, Italy, the Netherlands, Turkey, Canada, Australia, Denmark and Norway. Together, the core group has been projected to buy about 730 aircraft
A “couple” of these countries are delaying planned purchases of the jet, a move that will boost its initial prices, Jon Schreiber, a senior official in the Pentagon program office, told Reuters on Nov. 23.
Heath, at the industry conference in New York, said Lockheed’s view was that the partner countries “remain very solidly supportive of the program.”
Competitors include Boeing Co’s (BA.N) F/A-18E/F Super Hornet and the Eurofighter Typhoon, made by a consortium of British, German, Italian and Spanish companies.
Shares of Lockheed were up 1 cent at $78.20 in afternoon New York Stock Exchange trading. (Reporting by Jim Wolf; editing by Lisa Von Ahn) ((firstname.lastname@example.org; +1-202-898-8402; Reuters Messaging: email@example.com))