Lockheed funds suppliers to keep F-16 fighter line going

WASHINGTON (Reuters) - Lockheed Martin Corp LMT.N is using its own funds to pay suppliers and stave off the closure of its F-16 fighter jet production line as it waits to finalize orders from Pakistan and other countries, a company official said on Tuesday.

A U.S. Air Force F-16 Fighting Falcon from Aviano Air Base, Italy, is seen at Incirlik Air Base, Turkey, after being deployed, in this U.S. Air Force handout picture taken August 9, 2015. REUTERS/U.S. Air Force/Senior Airman Michael Battles/Handout

Orlando Carvalho, who heads Lockheed’s Aeronautics division, said the cost of keeping the F-16 supply chain ready for further orders was “very manageable,” but did not elaborate.

“We will have a gap in the production line because of the fact that there hasn’t been another order yet,” Carvalho told Reuters in an interview at the company’s annual media day.

Lockheed is now funding suppliers to ensure it will be able to build planes for Pakistan and other countries after it wraps up work on 36 F-16 jets ordered by Iraq in 2017.

Congress and the U.S. State Department are in talks about funding for a $700 million sale of eight F-16 fighter jets to Pakistan that were approved by Congress last week.

The U.S. Senate last week blocked a bid to derail the sale, but Senate Foreign Relations Committee Chairman Bob Corker has vowed to block the use of U.S. funds to finance the deal.

Corker and other lawmakers have expressed concern about Pakistan’s nuclear program, commitment to fighting terrorism and cooperation in the Afghanistan peace process.

Other lawmakers and State Department officials support the sale, saying the South Asian state needs to modernize its air force and counterterrorism activities.

The United States named Pakistan as a key partner in its war against terror following the Sept. 11, 2001, attacks and spent billions of dollars on military aid to help the country fight insurgents. But there is growing concern in Washington about providing the same level of assistance to Pakistan unless it shows it is using the funds effectively to eliminate militants.

Carvalho deferred questions about the Pakistan sale to the U.S. government, which is overseeing the deal.

Bahrain, Colombia and Indonesia have also expressed interest in F-16 fighter jet orders, and other countries could follow in later years, Carvalho said.

He said Lockheed was working with the U.S. government, which is in talks with India about possibly building F-16s in India.

Susan Ouzts, vice president of Lockheed’s F-16 program, told reporters that Indian Prime Minister Narendra Modi had expressed “substantial” interest in the plane during a recent meeting with Lockheed.

She said Lockheed officials would travel to India next month with a formal offer.

Additional reporting by Idrees Ali in Washington; Editing by Cynthia Osterman and Matthew Lewis