Business World

Thursday 18 January 2018

Trump claims credit for 'saving the US $600m' on jet fighters

President Donald Trump speaks in the Oval Office of the White House in Washington, before signing an executive order. Photo: AP Photo/Pablo Martinez Monsivais
President Donald Trump speaks in the Oval Office of the White House in Washington, before signing an executive order. Photo: AP Photo/Pablo Martinez Monsivais

Ayesha Rascoe

President Donald Trump has said his administration has been able to cut some $600m (€556m) from the latest US deal to buy about 90 F-35 Joint Strike Fighters - the jet fighter which he has criticised for cost overruns.

Mr Trump, speaking to reporters at the White House, said that Lockheed Martin had been responsive to his concerns about the high cost of the stealthy, high-tech warplane.

"We cut approximately $600m off the F-35 fighter, and that only amounts to 90 planes out of close to 3,000 planes," Trump said, attributing that figure to Lockheed ceo Marillyn Hewson.

Negotiations for the 10th batch of F-35 aircraft - about 90 planes - have been under way, with a deal expected by the end of the month.

The contract was expected to be around $9bn (€8.3bn), with the price per plane falling below $100m (€92.6m).

Mr Trump said he became involved in the discussions over the cost of the aircraft about a month ago when he was still President-elect because the negotiations were not progressing.

"They were having a lot of difficulty. There was no movement and I was able to get $600m approximately off those planes. So I think that was a great achievement," Mr Trump said, suggesting the savings would be even larger as more planes are bought and as the administration looks at other contracts.

"We will be savings billions and billions and billions of dollars on contracts," he said.

The United States is expected to spend some $391bn (€362bn) over 15 years to buy about 2,443 F-35 aircraft, which are being built in different versions for the Air Force, Navy and Marines.

The price of the F-35 has typically been dropping with each new batch as Lockheed and the US government ramp up production of the aircraft, which helps to lower overall costs.

While Mr Trump and other US officials have criticized the F-35 programme for delays, cost overruns and high aircraft costs, the program has been stabilising in recent years and the costs have been coming down.

"There were great delays, about seven years of delays, tremendous cost overruns," Trump told reporters.

"We've ended all of that and we've got that programme really, really now in good shape, so I'm very proud of that."

Financial results a week ago show Lockheed Martin beat estimates for fourth-quarter revenue and earnings, but delivered fewer-than-forecast F-35 jets in the previous year.

It also said internal controls for financial reporting were ineffective at its Sikorsky helicopter business.

Lockheed could not validate the accuracy of financial information, according to a source who spoke on condition of anonymity because they were not authorized to speak publicly.

Lockheed delivered 46 F-35s in 2016, fewer than the 53 it had expected.

Still, net sales for the F-35 business unit, Aeronautics, were up 14pc from 2015 due to increased production of the stealthy F-35 fighter jets.

The company is the Pentagon's number one weapons supplier.

Lockheed Martin's ceo Marillyn Hewson said the defence contractor plans to "drive affordability" in 2017, when the results were announced.

She said that she had met Mr Trump four times and discussed lowering costs of Lockheed's products including the F-35. (Reuters)

Irish Independent

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