Marillyn Hewson, the Chief Executive of Lockheed Martin Corporation (NYSE:LMT) has informed Donald Trump that she will work to reduce the cost of the F-35 fighter jet. This is being seen as a victory for the business-like bargains the President-elect is making, even before moving into the Oval office.
Trump had posted a tweet on Thursday saying that Lockheed Martin’s business rival Boeing would be able to make a cheaper alternative to the F-35. Trump said, “Based on the tremendous cost and cost overruns of the Lockheed Martin F-35, I have asked Boeing to price-out a comparable F-18 Super Hornet!”
The comment came after Trump met the heads of both the businesses on Wednesday – Boeing, and Lockheed Martin, which is headquartered in Maryland.
Marillyn Hewson Has Good Discussion With Donald Trump
Hewson spoke to Trump on Friday after this comment, and later said she understands the message “loud and clear”. She says it was a very good and fruitful discussion. In fact, Hewson has even given the President-elect her personal commitment about this.
Following this, the CEO disclosed that Lockheed Martin is prepared to bring down the cost of their fighter jets. Trump has already been assured of the company’s decision.
However, Hewson or Lockheed Martin did not disclose by how much the price of the F-35 would be brought down. That has spurred speculation by many industry observers and analysts. According to some analysts, it might be difficult for Lockheed Martin to bring down the cost of the F-35 fighter jets to the levels of Boeing (NYSE:BA) in spite of what Marillyn Hewson says.
The Lockheed Martin stock was down by about 2 percent immediately after the Trump tweet. The stock price of Boeing, on the other hand, went up by 0.5 percent.
Should Lockheed Martin Reduce the F-35 Price?
Defense analysts are also unsure of whether Lockheed Martin (NYSE:LMT) will eventually reduce the price, as both the aircrafts are not comparable. The United States needs stealth technology to counter the advanced defenses China and Russia. Lockheed Martin is providing the country area denial and penetrating anti-access systems. On the other hand, the F-18 of Boeing is an older generation aircraft that does not offer stealth capabilities like the F-35 does.
So this is a comparison like apples with oranges, they say. Defense analyst Richard Safran says, Trump’s tweet was “impractical if not irrational”. He has probably been misinformed, Richard adds.