Lockheed F-35 fighter project in doubt after Trump tweet encourages rival Boeing

[nitpicker]

https://www.theguardian.com/us-news/2016/dec/23/lockheed-f-35-fighter-project-in-doubt-after-trump-tweet-encourages-rival-boeing

Lockheed F-35 fighter project in doubt after Trump tweet encourages rival Boeing

Reuters

Friday 23 December 2016 01.49 GMT
Donald Trump has again criticised the cost of Lockheed Martin’s F-35 fighter jet and tweeted that he has asked Boeing to offer a price for an older aircraft that lacks the same stealth capabilities. Trump posted his message on Thursday, a day after the president-elect met the chief executives of both aerospace companies. In after-hours trading following the tweet, Lockheed shares fell 2% and Boeing’s rose 0.7%.

While the F-35 program has been dogged by problems and costs have escalated to an estimated $379bn, it is significantly newer than the F-18 Super Hornet Trump referred to. The aircraft does not have the same stealth capabilities. “They’re two completely different aircraft from different generations,” said Phillip Carter, a senior fellow at the Center for a New American Security, a Washington-based thinktank. “It’s like comparing an old jeep to a Humvee.”
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Dan Grazier of the Project on Government Oversight, a non-profit that investigates government contractors, said the F-35’s stealth capabilities drove up the cost, and its usefulness had not yet been demonstrated. He said canceling the program, however, would be “disruptive”.
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If Trump scrapped the F-35, such a move by a new administration would have some precedent. President Jimmy Carter canceled the B-1 bomber program in June 1977, although it was resurrected by his White House successor, Ronald Reagan.

Trump’s jockeying for leverage via his Twitter account is likely to be a hurdle for all US defense contractors in the next administration, Roman Schweizer, aerospace and defense analyst at financial services firm Cowen & Co, wrote in a note to clients on Thursday.“We have no idea how this plays out but believe ‘Twitter risk’ for defense companies could be a significant issue over the next four years,” Schweizer wrote. “This is Lockheed Martin’s time in the barrel.” Lockheed declined to comment. The F-35 program is a critical sales generator for the company, accounting for 20% of last year’s revenue of $46.1bn.
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