Lockheed Martin is projecting fewer F-35 Lightning II stealth fighter deliveries in 2020 due to impacts on its global supply chain caused by disruptions related to the coronavirus pandemic.
The manufacturer is not yet sure exactly how much its deliveries will decrease, but is assessing likely outcomes, it said in an earnings call on 21 April.
The company delivered 134 F-35s in 2019, and is scheduled to transfer 141 examples this year. Its first-quarter results show that 22 were handed over by 31 March: a reduction from 26 in the first three months of last year.
Lockheed Martin lowered the upper end of its aeronautics unit’s annual revenue projection by about 2% to $24.6 billion. The company’s annual profit projection fell about 1% to $2.67 billion. The F-35 is the largest revenue-generating business line within the aeronautics unit.
“What we’re seeing is there are local distancing requirements that are being more-stringently applied across the globe. There’s workforce disruption,” says Kenneth Possenriede, executive vice-president and chief financial officer with Lockheed Martin. “There are likely impacts that are happening throughout their supply tier hierarchy. There are shipping constraints… We’re also finding there’s likely going to be some production impacts at our site.”
The majority of F-35s go through final assembly in Fort Worth, Texas. A smaller number of aircraft are built at final assembly and checkout facilities in Cameri, Italy and Nagoya, Japan. Both those sites were disrupted by coronavirus quarantined restrictions, but are running again, says Possenriede.
Suppliers are also impacted.
“Think of them as travel restrictions and site access that are most likely the common cited driver of impact,” says Possenriede. “We’re seeing increases in supplier shortages. And in our sites, we’re seeing some absenteeism impacts.”
Modernisation and sustainment work on the F-35 programme does not look likely to be impacted, he says.
Lockheed Martin is hoping for a return to normal in the coming months.
“We’re hoping that the curve starts flattening in the second quarter, end of second quarter, and we can get to some kind of semblance of business as usual, whatever that is, starting in the third quarter,” says Possenriede.
