Lockheed Martin takes financial hit amid ongoing F35 troubles
Lockheed Martin still expects to deliver between 90 to 110 F-35s throughout the rest of 2024. (Photo: US Air Force / Staff Sgt. Zachary Rufus)
The company remains in negotiations with the US Government over the Lot 18 and 19 F-35 production contract, following the fourth quarter 2023 US$7.8 billion contract modification.
Lockheed Martin’s overall Q3 results saw a small amount of growth for the manufacturer compared to 2023 at US$17.1 billion, but a dip in its Aeronautics business which reported $6.5 billion in sales – a decline of 3% – primarily driven by lower F-35 deliveries and delays.
The company delivered 48 F-35s in the quarter and still expects to deliver 90 to 110 aircraft for the rest of the year, with the remaining amount of Lot 15 to 17 to follow afterwards, its CEO, James Taiclet Jr, said.
Lockheed Martin also disclosed that its work on Lot 18-19 of F35s was ongoing and it remained in negotiations with the US Government, following the $7.8 billion contract modification for 126 F-35s awarded in 2023 to assist with speeding up delivery delays.
Initial funding for the work, however, has now run out with a deal not yet struck for the two production lots, leaving the company to stump up around $700 million costs in the third quarter to keep production running, it stated. It expects to come to a contractual agreement with the US Government and recover some multi-million-dollar costs incurred in the fourth quarter of 2024.
Lockheed Martin is still working on Technology Refresh-3 (TR-3) integration in the 5th-generation fighter, which has proved to be an ongoing “technical issue”, Taiclet added.
“Those test points [for a Release 2 concept] are going to be developed, not just in the fourth quarter, but they're going to be developed over the course of 2025 as well,” he said.
According to the Pentagon’s Joint Programme Office in August 2024, approximately $5 million is still being withheld per aircraft until the TR-3 upgrade is completed. Yet, in its Q3 earnings call, Lockheed’s CEO said that some of the costs could be recouped by improved delivery numbers over the next year.
“We will see the benefit of having delivered more aircraft and we will also see the benefit of having incremental withholds released,” commented Taiclet. “I would quantify that today at around $300 million to $400 million. And then, that will then continue to flow in 2026 and beyond.”
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