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Trump says he asked Boeing for competitor to Lockheed’s F-35

🕐 2 min read

(Bloomberg) — President-elect Donald Trump upended years of Pentagon procurement planning with a tweet on Thursday, announcing he had asked Boeing Co. to price an upgrade of its F-18 Super Hornet jet that could replace Lockheed Martin Corp.’s F-35, the most expensive U.S. weapon system ever.

“Based on the tremendous cost and cost overruns of the Lockheed Martin F-35, I have asked Boeing to price-out a comparable F-18 Super Hornet!” Trump said Thursday in a post on Twitter.

Lockheed’s $379 billion F-35 Joint Strike Fighter is intended to be the mainstay fighter of the Air Force, Navy and Marine Corps, replacing several older planes including Boeing’s F-18. Development of the F-35 is more than a decade in the works, and Lockheed is planning to build more than 2,400 of the aircraft for the U.S. and allied air forces, a project that will create tens of thousands of jobs at factories across the country and overseas.

The exact impact of Trump’s tweet wasn’t immediately clear. The Pentagon has scaled back purchases of the F-18, which lacks stealth and other high-tech capabilities of the F-35, and would require extensive design changes to be comparable to the newer plane. The F-35 is built in Lockheed’s Fort Worth plant

Lockheed shares fell 2 percent after Trump’s tweet in after hours trading, while Boeing rose 0.5 percent.

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The Pentagon had requested just two F-18 Super Hornets for the fiscal year that began in October. Congress has indicated in spending bills that it would like to buy at least 12 more.

Meanwhile, the F-35 program has had $81 billion in obligations for the last 10 fiscal years. Two contractors, Lockheed and United Technologies Corp., account for 97 percent of the spending, according to an analysis by Bloomberg Government. Yet the program has had repeated challenges, with defense officials saying it would need as much as $500 million extra to finish its development phase.

The fiscal 2017 defense authorization would allow an additional $9.9 billion for the F-35 this fiscal year. The total includes $3.3 billion in funding for the Navy and Marine Corps versions and modifications, and $4.8 billion for the Air Force F-35 variant and modifications.

Trump summoned the chief executives of both companies to his Mar-a-Lago resort in Florida on Wednesday, as well a group of top Pentagon officials, to discuss the costs of the F-35 program and also Boeing’s proposed replacement for Air Force One, the presidential aircraft. Boeing CEO Dennis Muilenburg said he told Trump the new Air Force One would be built for less than $4 billion, less than what Trump said the plane would cost.

Lockheed CEO Marillyn Hewson said in a statement after the meeting that she had assured Trump the company would continue efforts to reduce the F-35’s costs. She didn’t announce any new promises.

Lockheed spokesman William Phelps said the company had no comment. Boeing didn’t have an immediate comment, spokesman Todd Blecher said.

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With assistance from Thomas Black, Tony Capaccio and Roxana Tiron.

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