F-35 strike fighter deal near between Pentagon, Lockheed

Despite sequester cuts, the Pentagon has made efforts to protect the F-35 strike fighter jet, and looks to be moving toward a deal for a new order from manufacturer Lockheed Martin.

“There still appears to be very strong support for the F-35, and of course that is our largest program," said Marillyn Hewson, Lockheed's chief executive officer.

The deal between the Pentagon and Lockheed will reportedly deliver 71 jets in two batches, the sixth and seventh orders of the fighters.

"We've been very open and transparent with our data and I think the negotiations are going well," Hewson said. "We've making good progress and we hope that we'll be able to close in the near term."

Pentagon officials have said the F-35, while the costliest weapon system, is "a very high priority."

"Could we protect it completely? I'm not sure," said Frank Kendall, the Pentagon's chief weapons buyer. "We have to look at trade-offs. We may address some of those decisions in the fall, but right now, we are committed to the program. That hasn't changed."

The F-35 has a total price tag of $391.2 billion for the 2,443-craft fleet. Sequestration could force Department of Defense to cut $52 billion in automatic reductions this year, starting October 1.

Lockheed cut workforce and trimmed its budget, even as its shares rose 28 percent this year and its second-quarter earnings were better than expected.

Its income jumped 10 percent, to $859 million from $781 million last year.

“We’ve been very proactive,” Hewson said, explaining that the company has been “getting ahead of the budget cuts by reducing expenses and headcount.”

Sequesteration is "a little tougher maybe than what we were thinking," said Lockheed CFO Bruce Tanner. But "it's not affecting us as deeply as we thought it would at the start of the year, when sequestration was first implemented."