Lockheed Martin (NYSE:LMT) will delay takeoff on its Joint Strike Fighter program due to a nagging problem that may leave the defense contractor's investors jittery.
The company plans to put off test flights of the F-35 JSF by a full year because of concerns over the aircraft's weight. Originally scheduled for 2005, the first test flight is now expected in 2006. As a result, an initial production run of 500 planes also has been pushed back a year from 2006 to 2007.
Not surprisingly, the gargantuan $244 billion JSF deal is immensely important for Lockheed, both now and in coming years. In fact, JSF work and other combat aircraft programs were major factors in the company's robust earnings growth last quarter. But delays typically mean mounting costs, which can lead the government to cut funding.
At the moment, a pullback is unlikely. The JSF is billed as the future multipurpose fighter for the U.S. armed services, as well as for the U.K.'s military. In addition, several other European nations are participating.
But it is precisely this need to be all things for all parties involved that is creating problems. In order to satisfy the U.S. Marines' needs, Lockheed is building a version of the jet that can hover in place and land vertically. This feature requires more weight, and evidently the extra pounds push the plane beyond the specifications laid out by the government.
The weight issue has been known for some time now, but there were indications that the problem was licked. United Technology (NYSE:UTX), a contractor responsible for the jet's engines, announced late last month that the system that will provide the hover and vertical landing capability was below its contracted target weight. In another sign of progress, subcontractor Northrop Grumman (NYSE:NOC) started assembly of the fuselage and delivered an avionics system ahead of schedule. Even so, the airframe remains too heavy.
With a broad stable of contracts, Lockheed is hardly on the ropes. But the JSF's problems and the company's recent loss to Boeing (NYSE:BA) for a Navy anti-sub plane project suggests that even in an era of ballooning defense budgets, the defense giant is vulnerable.
Fool contributor Brian Gorman is a freelance writer living in Chicago, Ill. He does not own shares of any companies mentioned here.
