?>

Australia to Stretch Out F-35 Deliveries

by: Matthew Potter
May 3, 2012

Category: Australia, Business Line, Canada, Companies, Countries, development program, Events, Lockheed Martin, Military Aviation, production program, Proposal, Restructuring | RSS 2.0

One of the key components of the F-35 Joint Strike Fighter (JSF) program was the early participation by U.S. allied countries. Unlike traditional Foreign Military Sales (FMS) these countries provided some of the development costs and committed early to buy the the aircraft rather then wait for the establishment of production and get it after the aircraft entered U.S. service. These included Great Britain, Australia, Canada and The Netherlands.

These countries planned to buy different amounts of the three types of the F-35. Britain to operate from their new carriers and replace the Harrier Jump Jet, Canada to retire their CF-18 fleet and the other two to upgrade from the aging F-16. In fact the F-35 would be similar to the F-16 program with parts and components made by the buying countries. Norway, Japan and Israel have also decided to buy the F-35 over other potential aircraft.

The F-35 has seen serious delays and cost growth due to testing and development issues. It is currently in Low Rate Initial Production (LRIP) as well as continuing testing. The U.S. in their latest budget proposal have decided to stretch production out to save money in the near term. Australia has now decided to do the same thing.

That country’s budget plans now call for delays of accepting the majority of their aircraft to mirror current U.S. plans. The goal is to save over $1.6 billion in the next few eyars. The first two Australian aircraft are in production and should be delivered in 2014-15 to start training but their first squadron will not stand up now for a few years after that.

The problem with stretching out production buys is that while it does save money in the near term the same number of systems will have to be bought over a longer time. Due to inflation alone as well as the loss of production efficiencies the average price per aircraft will increase causing the whole program to get more expensive. One potential problem that may arise is that the total number to be bought will be reduced.

Canada is also re-considering their F-35 buy due to issues with how the contract was awarded last year. These decisions will be a blow to Lockheed Martin (LMT) as they reduce near term revenue and earnings.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Tags: , , , , , , , , ,


| Give a Comment | trackback

No Comments

Leave a Reply

You must be logged in to post a comment.

    Like Us On Facebook

  • Search This Site

    Custom Search
  • Upcoming Events

  • FREE Business Downloads

  • Widget Area

    This is widget area, add your widget here from your widget on appereance on your admin panel

>