Lockheed expects delays for Middle East aircraft orders

Washington DC
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Two major deals in the Middle East for Lockheed Martin aircraft are likely to have to wait for at least another year to be signed, said chief executive Robert Stevens.

The United Arab Emirates has indefinitely postponed plans to order 12 C-130Js, Stevens said, adding that the UAE has decided instead to focus investments on air and missile defence systems in the near term.

Separately, Iraq reallocated funding earlier this year that had been allocated to buy 18 F-16s, but government officials in Baghdad may return to the bargaining table in 2012, Stevens said.

"Our sense here is that we will reinvigorate those discussions about the 18 F-16s during the balance of this year and probably have more to talk about in 2012 about that likely order placement."

In early April, Stevens said, he met with an Iraqi delegation at the F-16 assembly line in Fort Worth, Texas. The delegates assured him that the Iraqi government still remains committed in the long term to buying F-16s, and may ask "for probably more than 18 tactical fighters".

Iraq's interest in new fighters is driven by US plans to withdraw from the country by the end of this year. Since the 2003 war, the Iraqi air force has lacked jet-powered fighters of any kind and depends on US aircraft to defend the country's airspace.

The order deferrals in the Middle East come at the same time as both F-16 and C-130J production lines are approaching recent peak levels.

The C-130J is ramping up to 36 aircraft deliveries in 2012 and continuing for at least a few years afterward. Lockheed has received a fresh orders boost for the aircraft, after announcing the receipt of a Foreign Military Sales contract to produce a second stretched-fuselage example for the Israeli air force. The deal also includes funding to acquire long-lead items for a third aircraft for the nation, which ordered its first example in April 2010. Lockheed says all three Israeli aircraft will be delivered between early 2013 and late 2014.

Lockheed meanwhile plans to deliver 40 F-16s in 2011, but that level of production could be harder to sustain.

"We've got some work to do in 2013 to keep that number back up there or else it will, in fact, drop off at that level," Stevens said.