Pentagon starts cost-cutting reviews of F-35, presidential aircraft

WASHINGTON-Reuters

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U.S. Defense Secretary James Mattis ordered cost-cutting reviews of two major aircraft acquisition programs, the F-35 fighter jet and Boeing Co’s next-generation of the Air Force One presidential plane, according to Pentagon memos released on Jan. 27.

The review of Lockheed Martin Corp’s F-35 program, which U.S. President Donald Trump has derided as being too expensive, would have two parts: one looking at how to cut costs, and the other determining whether Boeing’s F/A-18E/F Super Hornet, with improvements, could be an effective, cheaper alternative, the memo said.

Costs for Lockheed Martin’s F-35 program have escalated to an estimated $379 billion. The program accounted for 20 percent of the company’s total revenue of $46.1 billion last year.

The chances that the review would cause a major change were low, according to a report published by Byron Callan, an analyst at research firm Capital Alpha Partners. Callan said costs could be cut if requirements and the aircraft’s capabilities were also relaxed.

In a statement released on Jan. 27, Lockheed Martin said it stood ready to support Mattis’ review of the program, adding that the cost of the F-35 could go down if the United States and other customers committed to purchasing the planes in larger, multi-year batches.

The review of the Air Force One replacement, which Trump has also called too expensive, would look at the plane’s requirements and systems and identify courses of action to reduce acquisition and sustainment costs.
In December, Trump extracted a promise from Boeing Chief Executive Dennis Muilenburg that the cost of replacing Air Force One would not exceed $4 billion.

“We’re going to get it done for less than that,” Muilenburg told reporters last month, “and we’re committed to working together to make sure that happens.”

On Friday, a Boeing representative said the company has been providing information to the Trump administration for some weeks and was committed to providing equipment to the military as affordably as possible.