Lockheed Martin announced increased sales relative to 2015 in its third quarter earnings report released Tuesday, identifying the F-35 program as the major driver of its $11.6 billion in reported sales. “The biggest growth area for us is the F-35,” executive vice president and chief financial officer Bruce Tanner told reporters on a conference call. While CEO Marillyn Hewson, on the same call, praised the rollout of the first Japanese F-35A and Norway’s announcement of interest in the first proposed block buy of F-35s, Tanner said that most of the growth in the F-35 program came from unexpected increases in sustainment sales. The company’s cost estimates for setting up F-35 operations at military bases were too conservative, said Tanner. Despite this growth, there are financial challenges for the F-35 program. For one, delivery schedules will be delayed until sometime in 2017 as Lockheed completes coolant tube repairs on existing and in-production F-35s, Tanner said. Also, negotiations with the Defense Department for work related to low-rate initial production batches nine and 10 are currently held up by “typical sticking points” around pricing, terms, and profit level. Tanner said Lockheed had received some additional funding from the government, but not the entire amount. As a result, Lockheed reported $950 million in “exposure” on unpaid F-35 contracts, an amount Tanner said Lockheed hoped to receive either by the end of the year or during 2017.
U.S. Air Force F-35s and F-22s regularly deploy deep into the Pacific region from Alaska, Utah, and Hawaii. In the future, though, the head of U.S. Indo-Pacific Command would like to see the Air Force permanently station fifth-generation aircraft west of the international date line—closer to China.