We’ve seen this before. The Pentagon subjected Lockheed Martin Corporation (NYSE:LMT)’s own F-22 Raptor to significant order cuts, paring down its initial request for 650 of the high-tech stealth fighters to a final construction of just 195 aircraft. A similar reduction of the F-35’s orders will take a big bite out of Lockheed’s future sales, just when it needs all the cash it can get to fight back against budget cuts.
The F-35’s a much more versatile craft than the F-22, to be sure, and it fills a crucial need for the Air Force, Navy, and Marines. It’s unlikely the Pentagon or Congress will axe the program entirely, as some have predicted. However, for a Defense Department scrambling to find cash under every couch cushion, ramping up production of the aircraft and fulfilling its lofty acquisition goals may very well prove too costly to complete.
Storm clouds gathering
South Korea’s award is only a minor part of Lockheed Martin Corporation (NYSE:LMT)’s global goals for the F-35, but a loss to The Boeing Company (NYSE:BA)’s older, cheaper F-15 could be a harbinger of cuts and delays from international partners. That’ll be enough to start up a vicious cycle of cost increases on a per-plane basis – increases that could critically threaten the aircraft’s lofty future with the Pentagon.
Lockheed Martin Corporation (NYSE:LMT)’s betting a lot on the F-35, but after South Korea, the skies are looking a lot stormier for this high-profile fighter of the future.
The article What South Korea Means for the F-35’s Future originally appeared on Fool.com.
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