Graham Warwick/WASHINGTON DC Chris Jasper/London
Lockheed Martin's financial position is set to worsen, with the manufacturer predicting a loss for the second quarter of this year and significantly reduced earnings for 1999 and 2000. It blames spiralling costs, delays in C-130J production and delivery, and launch vehicle failures and delays.
The US giant, which recorded sales of more than $26 billion last year, anticipates a loss of between 10ó and 15ó a share for the second quarter, having reported profits of $1.52 a share, or $289 million, in the same period last year. Taking this year and next year together, it expects earnings to be $1.4 billion lower than estimated, with cash flow down by about $1 billion.
For this year, anticipated aircraft delivery delays and launcher problems in the space sector have caused Lockheed Martin to reduce its predicted net earnings by $125 million and performance problems by $205 million. Previously anticipated asset disposals have been delayed, wiping out gains of $125 million. Problems with the C-130J improved Hercules programme will cost $275 million.
For 2000, timing delays are expected to cost $140 million, performance issues $345 million, failed portfolio shaping gains $35 million and the C-130J $110 million.
The Maryland-based company says C-130J production will be 16-19 aircraft this year, instead of the 24 anticipated. Thirty aircraft are expected to be delivered. Next year, C-130J production will remain "in the mid-teens" rather than the anticipated mid-20s, says the company, and deliveries will be in the low rather than the mid-20s.
Lockheed Martin has also revised downward both the number of anticipated Atlas, Proton and Titan launches and the profitability of its commercial satellite manufacturing business, following several failures.
"Clearly, our forecasts about some key programmes have not been realised and we have not executed consistently across the corporation to our expectations," says chairman and chief executive Vance Coffman.
"We will continue to examine operational, organisational and strategic alternatives. We are examining each of our markets and positions in those markets."
Lockheed Martin recently announced it was cutting the 9,550-strong workforce of its Marietta, Georgia-based Aeronautical Systems division by 2,000, or more than 20%, to reduce overheads on the C-130J and F-22 programmes.
Production plans for the C-130J have been hit by the USAF's decision to delay replacing its C-130Es, partly because of cost. The company aims to reduce the C-130J price of "above $50 million" by $10 million for a "baseline configuration".
• Boeing is slashing the workforce of its St Louis, Missouri, military aircraft plant as production of the F/A-18C/D and F-15E winds down. The decision to axe 6,500-7,000 jobs follows Greece's decision not to buy F-15s and delays in potential exports of the F/A-18.
Source: Flight International
