Lockheed Raptor program is cut 15%

Number of F/A-22 fighters to be reduced by 49 to 276

January 07, 2003|By BLOOMBERG NEWS

WASHINGTON - Production of Lockheed Martin Corp.'s F/A-22 jet fighter has been cut by about 15 percent to help pay for a potential development-cost overrun of as much as $1 billion, according to a U.S. Defense Department order.

In his Dec. 30 directive, Pentagon Comptroller Dov S. Zakheim reduced the number of Raptors by 49, from 325 to 276. The Raptor program, which initially called for 750 aircraft, has been cut six times since 1991.

The Pentagon has spent $26 billion of the $69 billion planned for the program.

"A cut in the rate of production will result in each plane costing more and fewer airplanes to meet the Air Force's future war-fighting requirements," said Loren B. Thompson, an analyst for the Lexington Institute, a defense research group in Washington.

Lockheed Martin spokesman Greg Caires wasn't immediately available to comment.

The Air Force's 2004-2009 fiscal budget plan called for 209 of the aircraft.

Deputy Defense Secretary Paul Wolfowitz, in a Dec. 12 memorandum that reviewed major weapons programs, directed the service to buy no more than 203 of the planes through 2009. That number has now been reduced to 163.

Wolfowitz also ordered a review of how best to pay for what's estimated to be a 3.3 percent overrun in the $20 billion development phase.

The Air Force can still buy the aircraft that have been cut if it can demonstrate cost reductions over the next several years, Thompson said.

Each F/A-22 costs about $204 million when calculated in inflation-adjusted dollars, a price that includes everything from early development to hangar construction, making it the most expensive fighter ever.

Lockheed Martin, which has its headquarters in Bethesda, assembles the Raptor in Marietta, Ga., and Fort Worth, Texas. The aeronautics unit of the world's largest defense contractor is making the Raptor. The unit had $1.67 billion of the company's third-quarter sales of $6.54 billion. The unit also is developing the F-35 Joint Strike Fighter.

The F/A-22 was designed in the mid-1980s to counter advanced Soviet Union fighters and won't be ready for combat for more than three years.

It will replace the F-15C Eagle as the top U.S. air-to-air fighter and will combine the latest avionics and software in a frame that's designed to be almost invisible to radar.

Boeing Co. and Northrop Grumman Corp. are the top F/A-22 subcontractors, providing parts of the fuselage and wings, radar and electronics. The Pratt & Whitney unit of United Technologies Corp. makes the engines.

Lockheed Martin's shares fell 21 cents yesterday to close at $58.50.

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