With 104 F-35 Joint Strike Fighter jets delivered to-date, but a goal of selling more than 5,000 of the birds eventually, Lockheed Martin (NYSE:LMT) has been hoping the F-35 would "catch fire." Just not like this.
U.S. Naval Institute (USNI) News reported last night that an F-35A fighter jet at Eglin Air Force Base in Florida caught fire -- literally -- when attempting to take off on a training mission Monday. According to USNI, while the pilot was able to escape the burning plane, the $100 million-fighter jet was "severely damaged" and even "possibly destroyed."
What's that smell?
So far, the Air Force is saying only that there was "a fire in the back end of the aircraft" -- where the engine is -- but is not speculating on what caused it. According to the Los Angeles Times, "[A]ll F-35 flight operations for the Air Force at Eglin have been temporarily suspended as the military investigates the cause of the incident."
What is clear is that the news out of Florida constitutes a significant PR snafu for Lockheed -- and potentially a setback to a program that's expected to eventually produce upward of $1 trillion in revenues for Lockheed Martin.
To make those potential revenues actual, Lockheed Martin must spend more time building new aircraft, and less time helping the Air Force fix problems with the aircraft it's already bought and paid for. And with nearly 40% of all potential worldwide sales of the aircraft expected to come from international customers, getting revenues flowing will also require Lockheed to maintain enthusiasm for the plane among potential buyers.
Who's to blame?
This may become increasingly difficult, given recent events. After all, this isn't the first time things have gone wrong with the F-35 -- or even just the first time something has gone wrong with the plane's engine.
Two weeks ago, a malfunction involving oil valves aboard a Marine Corps F-35B while in flight caused the Pentagon to order mandatory inspections of the nation's entire fleet of F-35s (of all variants), suspending flights until inspections could be completed. (Similar issues were subsequently revealed on two other F-35s). As with this week's fire incident, the culprit then appeared to be Lockheed partner United Technologies (NYSE:UTX), which built the oil flow management system that underwent inspection earlier this month, and is also responsible for building the plane's F135 engine as a whole.
Hope springs eternal
Not all developments with the F-35 are bad, of course. For example, right about the same time firemen were hosing down Lockheed's burning plane, Bloomberg was reporting Monday that upgrades for the F-35, intended to keep the plane modern as technology advances are getting cheaper.
Through 2016, the Pentagon had estimated it would cost $2.57 billion to fix issues with, and make upgrades to planes already purchased. Now, the Pentagon is telling Congress that these costs could be as little as $1.65 billion -- 36% lower than previously assumed.
Of course, the Pentagon crunched these numbers before learning about its fire in Florida. If Lockheed doesn't get a handle on its quality-control problems soon, those savings could still go up in smoke.