Lockheed Martin Says F-35 Production Gain to Reduce Costs

Lockheed Martin Corp. (LMT) said it has sufficient time to more than double production of the F-35 Joint Strike Fighter when needed, with higher building rates allowing cost reductions of about 30 percent.

U.S. and international buyers will help spur output to more than 100 planes annually by about 2020 from 36 aircraft this year, Steve O’Bryan, Lockheed Martin’s vice president for the F-35 program, said in an interview at the Paris Air Show. Efficiencies from the growth will down a single fighter’s production costs to about $85 million then from $120 million now, he said.

The Pentagon is in final talks with Bethesda, Maryland-based Lockheed Martin on several billion dollars in orders for the next two annual batches of F-35 production amid efforts to make up for earlier delays stemming from cost and technology disputes. The new contracts may exceed 70 planes.

“This is a program at a tipping point,” O’Bryan said. “I am cautiously optimistic.”

The U.S., which has bought 29 of the jets annually in recent years, will increase order volume in 2015, with purchases from abroad also helping drive deliveries. The eighth year of production is scheduled to include building F-35s for Norway, Italy, Japan and Israel. Lockheed Martin already has adequate production capacity in place to build 60 planes a year, O’Bryan said.

“We are ahead of that bow wave and we feel confident we can do that,” O’Bryan said.

Lockheed Martin also is competing in South Korea for an order of as many as 60 planes, with the Boeing Co. (BA) F-15 and the Eurofighter venture’s Typhoon model in the running. Singapore also is looking at buying the single-engine Lockheed jet, O’Bryan said.

To contact the reporter on this story: Robert Wall in Paris via rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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