Lockheed Martin’s (LMT) F-35 faces further delays to the start of full-rate production as technical issues hold up a key testing phase. Lockheed stock fell.
The Pentagon has delayed combat simulation testing on the F-35, Bloomberg reported Monday. Initially, it was to begin in 2017, but subsequent schedule slips pushed it back to this December.
The problem is with the F-35’s Joint Simulation Environment, which allows the advanced stealth fighter to be tested against weather, range and other issues the jet could experience.
The program has struggled to develop the simulator’s software and functionality, according to government auditors. The Pentagon needs the simulation testing for the F-35’s Initial Operational Test & Evaluation, which clears the way full-rate production to begin.
Now the simulator testing and production will take place in 2021, Pentagon officials told Bloomberg.
Shares fell 1.7% to 362.43 on the stock market today. Lockheed stock is now forming a flat base with a 402.48 entry point, according to MarketSmith chart analysis. Top F-35 subcontractor Northrop Grumman (NOC) lost 2.5%. Engine supplier Raytheon Technologies (RTX) tumbled 7% Tuesday after reporting mixed Q3 earnings.
Last October, the Pentagon announced a similar delay to the F-35, citing the Joint Simulation Environment.
“We are not making progress on a joint simulation environment, integrating the F-35 into it,” Pentagon acquisition chief Ellen Lord said at the time. Instead of a green light for December 2019, she said it may come in January 2021.
The latest delay in full-rate production would weigh on Lockheed’s earnings and revenue in 2021. Before the announcement, the stealthy jet’s delivery rate was set to jump to more than 170 by 2022 from 121 in 2020.
Even with the delays, allies are still interested in the fifth-generation fighter jet.
The F-35 is at the center of diplomatic negotiations between Israel and Gulf Arab states. The United Arab Emirates has wanted the stealthy plane for several years and had expected to obtain it after establishing ties with Israel.
The F-35 is in the running in fighter jet competitions in Switzerland and Finland.
Follow Gillian Rich on Twitter @IBD_GRich for defense news and more.
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