Seeking commitment

This first appeared as a Comment in 29 April issue of Flight International

To a casual observer, Australia’s confirmation of a plan to boost its future fleet of F-35As to 72 aircraft – announced by Prime Minister Tony Abbott last week – should give Lockheed Martin cause to celebrate.
The fresh commitment for 48 of the conventional take-off and landing jets comes just a month after South Korea approved plans to buy 40 of the stealthy type, after all. However, Australia’s announcement had been expected a full two years ago, before it was deferred by the nation’s government of the day.
In the meantime, its air force opted to not only keep what was at one time to be a bridging fleet of 24 Boeing F/A-18Fs, but to add a dozen EA-18G electronic attack examples. Only time will tell if it will ever order the remaining 28 F-35s from an originally planned 100.
Questions also remain over the eventual detail of its new commitment, as the nation’s Department of Defence says “the timing and size of specific orders will depend on the prime manufacturers meeting the agreed cost, schedule and performance requirements”, and on continued work for Australian industry.
Sticking with the F-35 is not the same as tying the knot by signing a production order, and nations such as Australia – plus undecided participants like Canada and Denmark – depend on the US military to drive down unit costs for everyone by ramping up its orders.
Therein lies the problem. Plans to significantly ­increase annual production of the F-35 have repeatedly been moved to the right, while the US Department of Defense battles the combined effects of a shrinking budget and sequestration cuts. Each time the Pentagon trims a handful of jets from its annual spending plans, the average cost rises – for its armed services as well as international partners.
The original plan called for Lockheed to build more than 80 F-35s this year. In reality, it will complete only 30. That doesn’t help when the company is battling to halve its price for the next-generation model to a goal of $75 million by 2018.
Few can afford to sign orders at around $150 million per aircraft, which means more deferrals and/or cuts to original fleet plans. The Netherlands has already dropped its commitment from 85 to 37 jets, and the likes of Italy and the UK also seem doubtful as able to sign for their ambitious totals of the type.
Lockheed chief executive Marillyn Hewson has put on a brave face, but the company cannot rely on ­international buyers to prop up near-term orders.

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