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. Last Updated: 07/27/2016

Lockheed, Boeing May Split $200Bln Jet Order




NEW YORK -- Lockheed Martin Corp. chief executive Vance Coffman said Wednesday that the Pentagon was likely to split an order worth as much as $200 billion for a new jet fighter between his company and Boeing Co.


Coffman declined to comment on whether he supported that strategy, adding that he was focused on winning the order regardless of how the program is structured.


"We think the odds are more than 50-50 that they are going to come off that winner-take-all" strategy, Coffman said at an aerospace conference.


Lockheed and Boeing are each designing a version of the Joint Strike Fighter, an advanced-model stealth jet, which is expected to draw orders from the United States and its allies for more than 3,000 planes.


Until now, Pentagon officials have said they will award the entire contract to one of the competitors, with the other playing a supporting role in production.


"There are a number of alternatives they are looking at. We're saying, let's focus on winning," Coffman told reporters after addressing the conference.


"We probably aren't going to be consulted on whether [splitting the order] is a good thing or not," Coffman added.


In his formal presentation, Coffman laid out plans to rebound from a difficult year in 1999, in which the Bethesda, Maryland, defense-contracting giant saw shrinking revenues and profits, rising debt levels and a weak stock price.


The company plans to sell off non-core businesses, raising up to $1.5 billion to pay down debt with a goal of trimming its debt-to-capital ratio to 40 percent or 50 percent from 63 percent now, Coffman said.


Lockheed's long-term debt rose to $11.4 billion at year-end 1999 from $8.9 billion at the end of 1998.


Lockheed also is considering spinning off stakes in several subsidiaries through initial public offerings and hopes to unload its stake in Loral Space & Communications Ltd. when that stock rebounds from its current level.


"Given where the stock price is today, we're not going to do that. But I would say that at the next rational opportunity, we will," Coffman said.


Lockheed has cut capital spending and working capital requirements to boost cash flow in 2000 and made a big step toward reaching its full year cash flow goal of $500 million with a first-quarter showing of $404 million.


"We are using every prudent method at hand to increase that cash flow," Coffman said. "Our challenge is to unlock the enormous value present in this corporation and share it with our shareholders."


The company had no plans to boost its 2000 cash flow target despite the strong first-quarter showing, Coffman added. Lockheed on Tuesday said it earned $48 million in the first quarter, or 12 cents a share, down 75 percent from $194 million, or 51 cents a share in the first quarter of 1999.


Like many aerospace companies, Lockheed has lost key technicians and engineers to high-flying start-ups and pure technology companies, Coffman said.


Defense specialists tend to enjoy their work but many will ultimately leave for Internet riches, Coffman conceded, adding that Lockheed was trying to keep as many as possible through aggressive counter-offers.