The Pentagon is going to approve a $29 billion program for a new helicopter from Lockheed Martin Corp. for the US Marine Corps.
The Pentagon is going to review and probably approve the CH-53K King Stallion, a new helicopter from Lockheed Martin Corp., which will be more expensive than the F-35, the Bloomberg news agency reported on Monday.
Reportedly, the King Stallion is designed to transport heavy cargo for the Marine Corps and should replace the Super Stallion. A meeting to review whether to approve production for the first 24 of the 200 planned helicopters in a program valued at as much as $29 billion has been scheduled to be held on March 30 by the Defense Acquisition Board.
According to Lockheed’s chief financial officer, Bruce Tanner, Lockheed Martin Corp. acquired the Sikorsky helicopter unit, which became a base for the CH-53K King Stallion, from United Technologies Corp. in 2015.
“Frankly, when we acquired Sikorsky it was the 53K program that drove most of our valuation as to why we wanted to own Sikorsky,” Bloomberg quoted Tanner’s words.
Tanner noted that he expects CH-53K Stallion sales, particularly in the overseas markets, will generate the “lion’s share” of revenue from the Sikorsky business unit over the “next ten to 15 years.”
However, there are enough many risks to selling US military technology to foreign nations, even if these states are NATO allies.
As Lockheed Martin Corp. noted in a quarterly SEC filing, submitted in January, international sales of the King Stallion pose risks to the company, as such agreements are constrained by “political and economic factors, regulatory requirements, significant competition, taxation, and other risks, associated with doing business in foreign countries.”
Cost estimates for the new helicopter have steadily been rising, and, according to reports, they may continue to rise further. In 2016, projections of the King Stallion’s cost were boosted by 14 percent from the baseline by Lockheed and Pentagon analysts. Recently, it was reported that costs may now baloon 21 percent above the baseline estimate, to reach $122 million per helicopter.
On March 10, Democratic representative Niki Tsongas questioned the aircraft’s currently projected production cost of $122 million per helicopter at a congressional hearing. Tsongas noted that this is “a heck of a lot of money,” adding that “even if there is no additional cost growth, it seems worth pointing out that $122 million per aircraft” exceeds the current cost of Lockheed’s F-35.