In April, Lockheed received a $127 million contract to modify the fourth C-5 to the C-5M standard following the end of the programme's system development and demonstration phase.
Chief financial officer Bruce Tanner has told analysts that the programme now faces "early production issues" that damaged earnings for Lockheed's aeronautics division during the second quarter.
The problems involve the "amount and timing and expenditures on our tooling, as well as achieving basic learning curves," says Tanner. However, he notes: "At the end of the day production programmes are what we do well in the aeronautics business, and I think we're going to get this right coming out of here."
The US Government Accountability Office reported in March that "production and related expenses have increased by about 108% since last year".
Lockheed is to upgrade 52 C-5Bs as part of a reliability enhancement and re-engining programme, but the USAF earlier this year decided to move 59 C-5As out of the modernisation programme. Service officials are still debating their precise need for strategic airlift assets, but are currently settled on a fleet mix of 205 Boeing C-17s, 53 C-5Ms and 59 C-5As.
That baseline is premised on a requirement to provide a maximum airlift capacity of nearly 44 million ton miles per day. However, the USAF plans to review the requirement in a major new study expected to be complete in May 2009.