Lockheed Martin is negotiating with Alenia on scaling back the US company's industrial involvement in the C-27J, but intends to continue jointly marketing the tactical transport as a companion to the larger C-130J. There are few other near-term sales prospects.

The two companies linked six years ago and C-27J development is virtually complete but only five firm orders have been booked. The Lockheed Martin Alenia Tactical Transport Systems (LMATTS) sales and marketing joint venture will be slimmed and talks to redefine the business relationship are under way.

"Lockheed Martin wants to get into a relationship more like that of a subcontractor providing propulsion and avionics, which would give Alenia the flexibility to be more cost competitive. Under the new relationship LMATTS would continue to be jointly owned," says Jamie Thurmond, LMATTS chief financial officer.

The US company is responsible for integrating C-130Jcommon systems - Rolls-Royce AE2100 engines and Honeywell avionics - but there is still no long-term production pricing in place. Despite this, Alenia earlier this year concluded a deal for five aircraft and seven options deal with Italy and is finalising the sale of 12 to Greece.

Talk of US-Italian friction has been fuelled by Alenia's recent C-27J US demonstration tour, against Lockheed Martin's advice and without its support. Alenia corporate senior vice-president Pierluigi Romagnoli denies the venture is in trouble although he concedes that final terms have still to be agreed, but adds that this hinges on Lockheed Martin finalising a USC-130J multi-year buy.

Efforts to reverse selection of the EADS Casa CN235ER for the USCG's Deepwater programme have suffered a setback, with the Lockheed Martin/Northrop Grumman Integrated Coast Guard Systems consortium rejecting a fresh unsolicited C-27J proposal. At the same time Army National Guard funding for a Shorts C-23 Sherpa replacement has been postponed to 2004 at the earliest.

Source: Flight International