Los Angeles: Lockheed Martin Corp led defense stocks lower yesterday after US President-elect Donald Trump’s latest Twitter salvo over the cost of the company’s F-35 fighter jet, in which he said he had asked rival Boeing Co to “price-out” an older aircraft as an alternative.
Lockheed shares were down about 0.8 percent in morning trade, nearing their lowest levels since the November 8 election and serving as the biggest drag on a basket of defense-related stocks. Boeing’s stock was also down, by about 0.2 percent. Trump posted his Twitter message late on Thursday, a day after he met with the chief executives of both aerospace companies.
“Based on the tremendous cost and cost overruns of the Lockheed Martin F-35, I have asked Boeing to price-out a comparable F-18 Super Hornet!” Trump said.
The practical implications of Trump’s actions were unclear, given that the F-18 is an older generation aircraft that lacks the stealth capabilities of the F-35. Most defense analysts do not consider the two as comparable aircraft. “Impractical if not irrational,” Richard Safran, a defense analyst at Buckingham Research, said by email. “First, the F/A-18 is a carrier-based naval fighter. Certainly it could not meet the US Marine Corps need for vertical lift. It would not be suitable for the Air Force either - the extra weight of a carrier fighter makes it less than ideal for the Air Force.”
“Unless the rules of physics have changed, you cannot make a non-stealthy two-engined, carrier-based aircraft from the 1980s into a single-engine, multi-role stealthy fighter from the 2000s,” Vertical Research Partners analysts wrote in a note.
Still, Trump’s dissatisfaction with the programme is a clear risk for Lockheed. The F-35 programme is a critical sales generator for the company, accounting for 20 percent of last year’s total revenue of $46.1bn.
Lockheed Martin late on Thursday declined to comment on Trump’s comments. The Pentagon did not respond to a request for comment on Thursday. Boeing spokesman Todd Blecher said on Thursday in an email that the company was committed to providing the capability and affordability to meet national security needs.
On Wednesday, Trump met the CEOs of Lockheed and Boeing at his resort in Palm Beach, Florida. Boeing CEO Dennis Muilenburg (pictured) told reporters there that he had guaranteed costs would not get out of control for a replacement to Air Force One, the presidential plane, another project Trump calls too expensive.
