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Pentagon to Cut Purchase of Lockheed Martin's F-35 Jets

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The U.S. Department of Defense has announced that it plans to purchase fewer F-35 fighter jets from Lockheed Martin Corp. (LMT - Free Report) over the next five years, than it had originally planned.

Pentagon’s Plans for the F-35 Jets

Importantly, the Pentagon was forced to cut approximately $4 billion from the F-35 program and other aircraft programs in fiscal 2017, and slash billions of dollars from other procurement accounts to meet the Congress budget deal.

The Pentagon remains committed to the F-35 Joint Strike Fighter program, worth $391 billion, which is the single largest weapons program. However, purchases for the program are expected to slow down a little over the next five years. The Pentagon’s next five-year plan, beginning fiscal 2017 through fiscal 2020, covers the purchase of 299 jets (down by 37 units from the previous expectation). However, the major spurt in orders is not expected to come until the projected purchase of 105 fighter jets in fiscal 2021.

For fiscal 2017, beginning Oct 1, 2016, it has planned to purchase 43 conventional takeoff F-35s for the Air Force; 16 F-35Bs for the Marine Corps, which can land like a helicopter; and four F-35C jets for the Navy, which can land on an aircraft carrier, worth a total of $10.1 billion.

This budget includes requests for 70 units in 2018 (88 planned earlier), 80 in 2019 (down from 90 planned earlier) and 86 units in 2020 (down from 92 planned earlier). The Pentagon expects the purchase of 2,457 F-35 jets in total.

Pentagon Eyeing Other Jets Now

Discouraged by the delays in the F-35 program, the Pentagon is now planning to add other major weapons in its five-year budget plan. This includes $15.7 billion for 75 KC-46A refueling planes by The Boeing Company (BA - Free Report) for the Air Force; $5.6 billion for 275 Boeing AH-64E helicopters for the Army and $2.2 billion for 16 Boeing F/A-18E/F Super Hornets.

The plan also covers $3.9 billion for 24 additional MQ-9 Reaper drones built by privately held General Atomics, and $29.4 billion for 9 Virginia-class submarines and $18.3 billion for 10 DDG-51 Aegis destroyers, both to be built jointly by Huntington Ingalls Industries Inc (HII - Free Report) and General Dynamics Corp. (GD - Free Report) . Additionally, it will buy 7 Littoral Combat Ships for $5.6 billion, 23 rocket launches worth $9.4 billion for the Air Force and 10 Global Positioning System satellites for $5.6 billion.

Zacks Rank

Lockheed Martin currently has a Zacks Rank #3 (Hold).

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