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LOCKHEED MARTIN CORPORATION

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Lockheed Martin Corporation : Lockheed sees F-16 fighter jet production continuing through 2020

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12/14/2013 | 12:09am EST

FORT WORTH, Texas (Reuters) - Lockheed Martin Corp (>> Lockheed Martin Corporation) has enough orders to keep its F-16 fighter jet production line humming through the third quarter of 2017, and hopes to land additional orders that would keep the line running through 2020, company executives say.

FORT WORTH, Texas (Reuters) - Lockheed Martin Corp (>> Lockheed Martin Corporation) has enough orders to keep its F-16 fighter jet production line humming through the third quarter of 2017, and hopes to land additional orders that would keep the line running through 2020, company executives say.

Around that time, the cost of Lockheed's new F-35 stealth fighter will have dropped so far that potential customers will likely opt for the newer jet, Bill McHenry, Lockheed's head of F-16 business development, told Reuters in a recent interview.

But for now, the company is continuing to pursue potential F-16 sales and upgrades in the Middle East, South America and other markets, he said.

"We wake up every day and go out and do what we can," he said. "But there's a crossover point out there ... sometime in the 2020 timeframe, where it'll make more sense to procure F-35s than F-16s." Lockheed on Friday marked completion of its 100th F-35 fighter.

Lockheed has produced over 4,500 F-16s since the program began in 1975, making the F-16 the best-selling fighter jet in history. The jets are flown by 26 countries, including 15 that have placed follow-on orders, McHenry said.

The United Arab Emirates is weighing new F-16 orders and possible upgrades, but failed to announce an order at the Dubai air show as some experts had expected.

Lockheed has dramatically scaled back production of the F-16 at its sprawling facility in Fort Worth, Texas, to about one plane a month now - from a peak production rate of 30 planes a month in June 1987, said spokesman Mark Johnson.

At the moment, the company is completing work on the last one of 20 F-16s it built for Egypt. That jet and seven others are being stored at the Fort Worth plant after the United States announced it would withhold most military aid due to concerns about democracy and human rights.

It is also working on 12 F-16s for Oman, several of which are in varying states of completion at the slimmed-down F-16 production line in Building 8, also known as the "Falcon's Nest," plus a total of 36 jets ordered by Iraq.

One of the 145 jets being upgraded for Taiwan is also in the factory, its nose cone already open for insertion of the new Active Electronically Scanned Array (AESA) radar.

McHenry said Lockheed saw additional opportunities to upgrade existing F-16s to the new F-16V configuration, which includes the AESA radar, embedded global positioning, updated electronic warfare equipment and avionics systems.

He acknowledged that other companies, including Britain's BAE Systems (>> BAE Systems plc), were trying to capture some of that upgrade work, but said Lockheed offered lower costs and greater economies of scale given the breadth of its existing work with the 26 countries that already operate the jet.

The Pentagon last month approved a deal under which BAE will upgrade 134 older F-16 fighter jets for South Korea, a move that could pressure Lockheed to compete more aggressively in the hunt for upgrade deals.

(Reporting by Andrea Shalal-Esa; Editing by Lisa Shumaker)

By Andrea Shalal-Esa

Stocks treated in this article : Lockheed Martin Corporation, BAE Systems plc
Stocks mentioned in the article
ChangeLast1st jan.
BAE SYSTEMS -0.06% 464.685 Delayed Quote.1.22%
LOCKHEED MARTIN CORPORATION -0.88% 304.51 Delayed Quote.17.34%
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Financials ($)
Sales 2019 56 802 M
EBIT 2019 7 954 M
Net income 2019 5 550 M
Debt 2019 11 563 M
Yield 2019 2,93%
P/E ratio 2019 15,80
P/E ratio 2020 12,81
EV / Sales 2019 1,72x
EV / Sales 2020 1,62x
Capitalization 86 043 M
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Mean consensus OUTPERFORM
Number of Analysts 21
Average target price 337 $
Spread / Average Target 11%
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NameTitle
Marillyn A. Hewson Chairman, President & Chief Executive Officer
Rodney A. Makoske SVP-Corporate Engineering, Technology & Operations
Bruce L. Tanner Chief Financial Officer & Executive Vice President
Nolan Don Archibald Lead Independent Director
Joseph W. Ralston Independent Director
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