Lockheed Martin Continues Overseas Sales Of The F-16

(MoneyWatch)  Despite the plans of the United States and many of its allies to replace the F-16 Fighting Falcon with the new Joint Strike Fighter (JSF) Lockheed Martin (LMT) over the last two weeks received significant overseas orders for the venerable light fighter. The JSF program is very similar to the F-16's in that different nations as part of their orders are going to build parts of the aircraft for assembly in Texas with the potential for assembly plants in other countries.

Despite this the F-16 still enjoys a robust foriegn market much of it due to the support of the U.S. Government and the needs of countries for a small, effective aircraft. Two North African nations announced that they will place orders for Falcons to be delivered over the next two to three years.

First Morocco executed the option on a contract signed several months ago to buy twenty-four aircraft. This along with support and spares totals to over $800 million. If all options on the contract are exercised the total value could be well over $2 billion to Lockheed.

Following this announcement came news at the end of the year that the U.S. Air Force has decided to sell a further twenty-four F-16 to Egypt. This sale will be done through the Foreign Military Sales (FMS) program and required Congressional notification. This announcement will lead to a contract being awarded to Lockheed early next year and this contract despite the similar number could be worth over $3 billion. The Egyptian air force currently flies over 200 of the aircraft and this will be a significant enhancement to their fleet.

The Obama Administration is also under pressure to sell the aircraft to Taiwan. That country already operates about 150 of the aircraft and desire to purchase 66 more. That is being held up by political discussions about how closer relationships and more deals with the island nation will affect the U.S. and China's politics. Another contract of that magnitude would also be good for Lockheed.

The countries who originally developed and produced systems like to see FMS and overseas sales eventually with a program. It reduces production cost and may help spread development ones as well. Lockheed wants them as it will allow them to keep their line running and provide a ready source of revenue. Along with the actual aircraft comes support and maintenance contracts only increasing the revenue. As is demonstrated with the Taiwan contract though it is not always easy to complete a sale. International politics and economics play a large role on whom are able to receive such systems.

The F-16 has established a track record for performance as well as sales to the U.S., its Allies and many foriegn nations. Lockheed Martin while transitioning to the JSF will continue to make, sell and service this aircraft as it has for almost thirty years.

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