With another tweet heard around the world, President-elect Donald Trump sent Lockheed Martin’s stock diving after singling out the F-35 Joint Strike Fighter programme.
Trump criticised the F-35 during his candidacy, but with five weeks to go before he takes office, his 12 December tweet sunk Lockheed’s stocks by more than 3%.
“The F-35 program and cost is out of control,” Trump tweeted. “Billions of dollars can and will be saved on military (and other) purchases after January 20th.”
Following Trump's tweet, Lockheed's executive vice-president and general manager of the F-35 programme Jeff Babione says: "We welcome the opportunity to address any questions the president-elect has about the programme."
Speaking at the Nevatim Air Base prior to the Israeli Air Force F-35 delivery ceremony, he adds: "The cost doesn’t just include the acquisition price. Lockheed Martin and its industry partners are also investing in reducing the sustainment costs of the aircraft recognising that much of the cost of owning and operating an aircraft is after it’s delivered."
Trump’s tweet marked his second swipe at the fighter jet this week, after he called the programme “out of control” during an 11 December interview with Fox News. Last week, Trump delivered a less withering blow to Boeing’s stock after he called to cancel the Air Force One recapitalisation.
It’s not unprecedented for a president to criticise the cost of a military aircraft. In 2009, a newly minted President Barack Obama called to cancel the presidential helicopter recapitalisation due to rising costs. Unlike the presidential aircraft replacement though, the F-35 represents a key warfighting capability for the US.
“It’s not a nice to have, it’s a must have,” says Andrew Hunter, a defence industry analyst at the US Center for Strategic and International Studies.
As the most expensive programme in the Defense Department’s history, estimated at about $380 billion for development and production plus another $1 trillion for sustainment, the F-35 represents an easy target for Trump.
But excepting a recent request for additional money to cover development costs, most of the programme’s cost growths occurred years ago, Hunter says. And while Trump styled himself as an expert dealmaker during his campaign, the Pentagon already played tough with Lockheed when the government unilaterally negotiated the price for the the ninth lot of low-rate initial production.
“If there’s savings to have, it would be to reduce the buy, either decreasing or leveling out production,” Hunter says.