Lockheed Loses $225M on Secret Project, Lowers F-35 Production Forecast
Company will press ahead on aeronautics project in hopes of turning it into a profitable production program.
Lockheed Martin lost $225 million on a classified military project due “performance issues,” the company told investors on Monday.
While the company did not disclose details of the project, executives said the secret effort is in the development stage and being worked on by its aeronautics division.
“We have a development contract that we believe will be successful from a schedule and performance standpoint, and then ultimately will turn into production, a production program,” Lockheed CFO Ken Possenriede said during the company’s quarterly earnings call. “We also believe there are additional opportunities out there. And I'll assure you, we believe ... there is still a very strong business case, given these associated opportunities.”
Lockheed’s Aeronautics business includes Skunk Works, the company’s famed research and development division behind the U-2 spy plane, SR-71 Blackbird, and F-117 attack jet. Lockheed is believed to be working on a hypersonic reconnaissance plane. It may also be the undisclosed developer of the Air Force’s secret Next Generation Air Dominance warplane.
“This will be a great program for our customers — and I'm talking about all the customers out there that are going to utilize this and it'll be a good program for the Lockheed Martin Corporation,” Possenriede said of the undisclosed project.
The company has a “very strong business case going forward, which will continue to grow,” Possenriede said.
“[T]he long term potential of this solution is significant for the company,” Lockheed CEO Jim Taiclet said.
Possenriede said Lockheed has the most classified projects within its aeronautics and space divisions.
“We see the classified portion of Lockheed Martin growing faster than the non classified portion of Lockheed Martin,” Possenriede said.
Meanwhile, the Pentagon and Lockheed are conducting an F-35 “production rebaseline,” Possenriede said. The COVID-19 pandemic and a desire to get new technology into the jets has prompted the decision to reexamine annual F-35 production levels. Lockheed plans to deliver between 133 and 139 F-35s this year. The details of the new production schedule are expected in the fall.
“You're going to likely see once that gets revealed…the plateau of production—slightly pushed out to the right, but also elongating, if you will,” he said.
Last month, Possenriede lowered F-35 production expectations, saying a “smoothing” would occur in the coming years. The jet represents about one quarter of Lockheed’s annual revenue.