Pentagon starts cost-cutting reviews of F-35, presidential aircraft

Pentagon starts cost-cutting reviews of F-35, presidential aircraft
Retired U.S. Marine Corps General James Mattis testifies before a Senate Armed Services Committee hearing on his nomination to serve as defense secretary in Washington, U.S. January 12, 2017.

REUTERS/Jonathan Ernst

WASHINGTON U.S. Defense Secretary James Mattis ordered cost-cutting reviews of two major aircraft acquisition programs, the F-35 fighter jet and Boeing Co’s (BA.N) next-generation of Air Force One presidential plane, according to Pentagon memos released on Friday.

The review of Lockheed Martin’s (LMT.N) F-35 program, which President Donald Trump has derided as being too expensive, would have two parts: one looking at how to cut costs, and the other determining whether the F/A-18E/F, with improvements, could be an effective, cheaper alternative, the memo said.

Costs for Lockheed’s F-35 program had escalated to an estimated $379 billion. The program accounted for 20 percent of the company’s total revenue of $46.1 billion last year.

The review of the Air Force One replacement, which Trump has also called too expensive, would look at the plane’s requirements and systems and identify courses of action to reduce acquisition and sustainment costs.

In December, Trump extracted a promise from Boeing Chief Executive Officer Dennis Muilenburg that the cost of replacing Air Force One would not exceed $4 billion.

“We’re going to get it done for less than that,” Muilenburg told reporters last month, “and we’re committed to working together to make sure that happens.”

On Friday, a Boeing representative said the company had been providing information to the Trump administration for some weeks and was committed to providing equipment to the military as affordably as possible.

Lockheed Martin did not immediately respond to a request for comment.

(Reporting by Phil Stewart, Idrees Ali, and Mike Stone; Editing by Chizu Nomiyama and Lisa Von Ahn)

Source: Reuters

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