June 22, 2011
LE BOURGET, France — Lockheed Martin and its U.S. military partners are
attempting to counter at the Paris Air Show this week negative publicity
over cost overruns and technical delays that have plagued the F-35
Lightning II stealth fighter aircraft project.
Senior project officials told reporters and analysts at a well-attended
briefing here that they have "turned the corner" in the troubled
development of the strike aircraft.
Cost issues became a point of contention during the recent Canadian
election campaign because of the federal government's plan to spend $9
billion to acquire 65 of the aircraft, with delivery expected to start
in 2016.
Critics, including parliamentary budget officer Kevin Page, have argued
that Canada's Department of National Defence is greatly underestimating
the total cost.
Defence industry publications and aerospace industry analysts have also
been critical in the lead-up to the high-profile Paris Air Show this week.
The respected Aviation Week magazine, in its Paris Air Show preview
booklet handed out to visitors, said the F-35 project faces a price
"sticker shock" due to "delays and overruns."
It also acidly noted that the Eurofighter Typhoon plans to "aggressively
challenge the F-35, which they think is overrated and costly."
A Lockheed Martin official told Postmedia News Wednesday that testing
this year is well ahead of schedule.
"We've uncovered no significant technical issues, what we might call a
show-stopper issue," said David Scott, director of the company's F-35
international customer engagement office.
"Everything is fundamentally sound on the airplane."
He also supported the Canadian government's contention that it will
spend $75 million U.S. per aircraft for the "fly-away" price, which
excludes major cost items such as spare parts, support equipment,
training and maintenance.
Canada is paying for the aircraft during the 2016-22 period when the
per-unit costs are going to be much lower, he said.
Canada is also not covering the current development costs that have
soared due to various technical issues.
"The forecast is that when Canada buys, the airplanes will be
substantially cheaper than they are today as we move down that cost
curve, as we increase the production rate, so a figure of approximately
$75 million U.S. in the time Canada is buying is an accurate figure."
Industry observers were guarded in their response to the new optimism.
"They've got the flight testing ahead of the much-delayed schedule that
they switched to earlier this year," said Bill Sweetman, an editor at
Aviation Week and consultant to an Emmy-winning PBS documentary on the
F-35 competition.
"They've got a lot of things to sort out, and the single biggest problem
they have is affordability," he told Postmedia News Wednesday.
"They have to bring the cost down from where it's projected to be,
otherwise the U.S. air force can't afford the required number . . . and
then you get into the death spiral of (fewer) numbers and higher cost."
Industry analyst Richard Aboulafia, vice-president at Fairfax,
Virginia-based Teal Group Corp., said the new optimism "is refreshing
but very difficult to verify."
He noted that criticism of the version of the F-35 being acquired by
Canada — the least expensive of the three F-35 models — has been
"overstated."
Both Sweetman and Aboulafia said Lockheed Martin can get to the $75
million U.S. per aircraft figure for Canada's shipment only by narrowing
as much as possible the definition of "flyaway."
"Flyaway cost is like buying a car," Aboulafia noted in an email.
"You drive it off the lot after paying the driveaway cost. But imagine
the additional cost of setting up your own garage to maintain and repair
it, plus the cost of the spare parts and the future upgrades needed to
keep it going for 30 years. That's the life-cycle cost."
The U.S. and its "partner" countries in the F-35 project — Canada,
Britain, the Netherlands, Italy, Turkey, Denmark, Norway and Australia —
will together buy more than 3,000 of the aircraft, according to National
Defence.
poneil@postmedia.com
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