Graham Warwick/WASHINGTON DC

Lockheed Martin is counting on improvements in its aeronautics sector to boost its ailing financial performance.

Chief financial officer Phil Duke says the C-130J is expected to be "very slightly profitable" by year-end, after the programme was re-baselined in June. This involved the company taking a charge of "over $200 million" to cover cost increases, delivery delays and production rate reductions.

The F-16 programme, already profitable, is expected to spearhead Lockheed Martin's recovery, with the order backlog on track to jump from 97 to 339 by year end. Duke admits the company's backlog and cashflow projections are based on signing an 80-aircraft F-16 contract with the United Arab Emirates (UAE) by the end of the year.

Progress with negotiations on the UAE contract, worth over $5 billion to Lockheed Martin, are "looking good", he says.

Sales by Lockheed Martin's electronics sector are increasing, but its space sector has been hit hard by launcher failures and is not expected to recover before 2001. Fewer Atlas, Proton and Titan launches than planned are expected this year and next. Commercial satellite sales and classified space business have also declined substantially.

As expected, the company has reported a second-quarter loss, of $41 million, with reduced profitability projected for the full year. Financial performance is expected to improve next year. "The big difference in outlook is the improvement in aeronautics," Duke says.

Source: Flight International