Lockheed falls as Trump tweets that F-35 program is costly

A SINGLE tweet from President-elect Donald Trump was enough to wipe nearly $3 billion off the value of this company.

THE controversial F-35 stealth fighter program, which Australia plans on investing $A24 billion into for more than 70 planes, has been slammed by US President-elect Donald Trump.

The Lockheed Martin-produced aircraft are a key component of defence forces in the US, Australia, Britain, Japan and other allies, but have been dogged by cost blowouts and other problems.

Shares of Lockheed Martin fell on Monday, wiping out nearly $2.7 billion ($US2 billion) of the company’s market value, as Mr Trump tweeted that making F-35 fighter planes is too costly and that he will cut “billions” in costs for military purchases.

Shares of other defence contractors, including Raytheon and Northrop Grumman, also tumbled Monday.

“The F-35 program and cost is out of control,” Mr Trump wrote on Twitter on Monday.

“Billions of dollars can and will be saved on military (and other) purchases after January 20th.” The program’s overall $US400 billion price tag has been dubbed the most expensive weapon system in history.

It is Australia’s largest ever defence purchase.

The F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th.

— Donald J. Trump (@realDonaldTrump) December 12, 2016

Defence Industry Minister Christopher Pyne says Australia remains committed to proceeding with the investment despite the criticism.

Speaking to reporters in London on Monday, Mr Pyne defended Australia’s choice of the jet, saying it was “the most potent weapon in the air”.

“We’re very confident that the Joint Strike Fighter is the right jet for Australia and for the United States and the rest of the world,” he said.

“Whether it has been efficiently managed from the United States’ point of view in terms of their cost and delays and so on is really a matter for them and for President-elect Trump’s opinion.”

Mr Trump didn’t mention any specific company in his tweet, but Bethesda, Maryland-based Lockheed makes the F-35 one-seat fighter aircraft and is a major US defence contractor.

The F-35 program made up 20 per cent of Lockheed’s total 2015 revenue of $61.5 billion ($US46.1 billion). And US government orders made up 78 per cent of its revenue last year. The F-35 program directly or indirectly supports more than 146,000 US jobs, according to the company’s website.

A Lockheed Martin F-35 jet. Picture: Rick Bowmer/AP

In a statement on Monday, Lockheed said that it has worked to lower the price of the F-35 by more than 60 per cent and said it expects the aircraft to cost $113 million each ($US85 million) in 2019 and 2020.

“We welcome the opportunity to address any questions the President-elect has about the program,” said Jeff Babione, general manager of the F-35 program. “It’s an amazing program.” This is the second time in a week that Mr Trump has blasted US aircraft spending.

Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!

— Donald J. Trump (@realDonaldTrump) December 6, 2016

Trump tweeted last week that costs to build new presidential planes by Boeing were “out of control” and ended the tweet with “Cancel order!”

Lockheed Martin shares fell $US6.42, or 2.5 per cent, to close at $US253.11 on Monday. Shares of Raytheon dropped 1.7 per cent to $US143.81, Northrop Grumman fell 2.7 per cent to $US232.07 and General Dynamics fell 1 per cent to $US173.74. Boeing bucked the trend, adding 67 cents to $US157.16.