ACCOUNTANTS VS. FIGHTERS

There are any number of ways to shoot down a fighter, air to air missiles, ground to air missiles, even good old fashioned bullets can do the job. But another way to shoot down almost any aircraft is to make it financially unaffordable. If you can’t buy it you can’t fly it.

The F-35 has flirted with financial disaster for its entire career. What was once touted as an affordable fighter has become an expensive program whose advocates now tout its technological prowess as a panacea for its ballooning cost.

Financial disasters and mismanagement can take a number of forms however;

 Aviation Week is reporting that;

“U.S. weapons maker Lockheed Martin said on Thursday it faced a potential termination liability of $1.1 billion on the F-35 fighter program unless it received additional funding for production of a sixth batch of airplanes by year end.

SEC guidelines require publicly traded companies to disclose potential liabilities and risks to shareholders, including possible exposure to termination costs.

In its SEC filing on Thursday, Lockheed said it had about $400 million in potential liability exposure as of September 30, but the total would rise to $1.1 billion by the end of the year, including about $250 million in cash exposure.”

It has been feared that Canada could not afford sufficient numbers of F-35’s, to this problem must now be added the fear that Lockheed-Martin can not afford to build F-35’s. As unlikely as it seems it is not impossible that the accountants at L-M could determine that the company would be better off without the program.

How this would impact relations with their prime customer, the Pentagon is problematic at best. It couldn’t get much worse as it is widely reported that Air Force Maj. Gen. Christopher Bogdan who runs the F-35 Joint Strike Fighter program for the U.S. government has called the relationship with Lockheed-Martin the worst he’s ever seen.

As unlikely as it seems that L-M would bow out of the program never forget that any large company is in business to make money for its shareholders. That is its sole concern. As much as a company may care for its suppliers and employees and for its customers, the bottom line is still paramount. If the right people, people who are in a position to loose money if the worst should happen, decide that the program is a financial failure and that the U.S. government is no longer in a position to throw in endless amounts of money to rescue it then any thing is possible.

Should the impossible happen, should either the customer or the vendor decide that the product is too expensive to buy or to deliver then it will be time once again to start thinking about other choices.