At last week’s Avalon Airshow in Melbourne, Australia, Lockheed Martin’s F-35 program director said the company is looking to ship more F-35 joint strike fighters to European clients, The Indian Express reported.
“We are starting to see other customers think about the F-35 being added to their fleet,” Jeff Babione, an executive at Lockheed, told reporters in Australia. Finland may be interested in the F-35 as well, an unofficial source told The Indian Express.
“We are talking to several other countries,” in addition to the 10 US allies who have already bought or agreed to purchase the joint strike fighter, Babione noted. Australia, Canada, Denmark, Israel, Italy, Japan, the Netherlands, Norway, the UK, and Turkey have already entered the cadre of “global participants,” according to Lockheed’s corporate F-35 website. It is not clear whether prospective clients were put off by the inability of Australia’s F-35s to fly through lightning.
Lockheed Martin argues that increasing the number of global F-35 shipments will help reduce the cost of the fifth-generation fighter for all parties involved, due to economies of scale. Babione, adopting the legacy marketing strategy encapsulated in the phrase “the more you buy the more you save,” called for the US and its allies to step up their yearly purchases — to help Lockheed make the goal of an $80 million jet by 2020 a reality.
“It is actually a very reasonable target,” the F-35 program director effused, “but it is going to take cooperation in changing the way we buy aircraft.” Specifically, the company wants lucrative, multi-year government contracts, which provide steady streams of revenue that Lockheed executives can tout during earnings calls to shareholders. Lockheed says publicly that three-year bulk orders can help drive down costs as the manufacturer will be able to order parts in larger quantities. “Maybe in the future you are talking about a multi-year [deal] and you could do a five year multi-year and increase the savings.”
US President Donald Trump exclaimed in January that the US had saved hundreds of millions on its tenth order of the joint strike fighters, a claim for which Trump does not deserve credit, according to some analysts. During closed-door discussions, Trump said he worked with Lockheed CEO Marillyn Hewson to bring the cost of the F-35 down. On January 31, however, Trump spoke from the Oval Office declaring that, Lockheed is “expanding and that’s going to be a good thing,” adding, “ultimately they’re going to be better off.”
Trump, a long-time New Yorker and well-versed in the ways of Wall Street, surely knows that, from Lockheed’s perspective, selling F-35s at a lower price means lower revenue, which could damage the company’s net income. The US is far and away Lockheed’s biggest F-35 client, as the US military is projected to buy more than 2,000 joint strike fighters, in addition to the fleet they already maintain. How can the F-35 as a “growth engine” for the company’s financial statements with prices of the jet falling? The question has already been answered by Hewson: “Increased international demand.”
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