Will Lockheed Martin Cuts Boost F-35 Sales Overseas?
In the world of high-tech fighter planes, operating costs for the long term have to be considered by officials in the Pentagon and defense departments everywhere. For that reason, Lockheed Martin (NYSE:LMT) went back to the drawing board and came up with a more affordable version of its F-35 logistics and operations system, Reuters reports. The plane could bring Lockheed more contracts that were expected to go to rival aircraft manufacturers.
The solution Lockheed Martin came up with was nearly 40 percent less expensive than the previous model for the F-35 logistics and operation, the news outlet reports. Pentagon officials were able to reduce their estimates from more than $1 trillion to $857 billion as a result of the development. Because the high costs put some of the fighter jet business in jeopardy, Lockheed Martin had gone back to the workshop in hopes of developing a more viable system.
The effort paid off, leading to the thought that the deal Boeing (NYSE:BA) made with the South Korean government for F-15 fighters could be brought back under the magnifying glass. Lockheed Martin’s ability to save the Pentagon hundreds of millions in operating costs could prompt South Korea to reconsider the $7.4-billion bid it is said to have accepted in a contract for Boeing military aircraft earlier in the week, according to separate Reuters reports.
Part of the impressive Lockheed Martin package included its Autonomic Logistics Information System (ALIS), which Reuters reports will serve as the control center for all F-35 fighters in operation around the world. Canada, Australia, and numerous European Union nations are clients of Lockheed Martin for these F-35 planes, the news outlet noted.
For Lockheed Martin competitor Boeing, the Missouri-based company recently neared closing a deal for six 787 Dreamliner planes with Chinese carrier Xiamen, according to a report published early Friday morning by Reuters. The sale for an estimated $1.27 billion would have been another score for Boeing in Asia. This development by Lockheed Martin may encourage South Korea, whose government is on a strict budget, to reconsider price considerations of the bid it moved toward accepting.
Lockheed Martin’s advances in weapon and plane technology could lead to deals with the defense department of South Korea and similar countries overseas.