Bloomberg News

Lockheed Names Aeronautics Chief Amid Tensions Over F-35

March 19, 2013

Lockheed Martin Corp. (LMT:US) named new leaders for its aeronautics business and its F-35 fighter jet program, the Pentagon’s costliest weapons system, as the company faces Defense Department pressure to cut the plane’s costs.

Orlando Carvalho, 54, becomes executive vice president in charge of aeronautics, Lockheed said yesterday in a statement. Carvalho, who has run the F-35 program since 2012, replaced Larry Lawson, 55, who is retiring. Lawson will take over as the president and chief executive officer of Spirit AeroSystems Inc. (SPR:US), the Wichita, Kansas-based company said today in a statement.

Lorraine Martin, 50, who was Carvalho’s deputy, takes over responsibility for the fighter jet, becoming the fourth manager of the program since President Barack Obama took office.

The estimated cost for a fleet of 2,443 of the fighters has climbed to $395.7 billion, a 70 percent increase since 2001, and Pentagon officials have been critical of Bethesda, Maryland- based Lockheed’s management of the program.

Air Force Lieutenant General Christopher Bogdan, the top defense official overseeing the F-35, said at an appearance at an Australian air show last month that the company was trying to “squeeze every nickel” out of the Defense Department. In subsequent comments, Bogdan said Lockheed got the message.

“What you should have inferred from my comments” was that “I need everybody” connected with the program “to worry about affordability,” Bogdan said March 5 at a defense industry conference in Arlington, Virginia. “That was a shot across the now because I have been slightly frustrated with real results, real actions that need to happen to reduce costs.”

Pentagon Negotiations

Carvalho, who will head the aeronautics unit (LMT:US) that also makes F-16 jets and C-130 cargo planes, is well-regarded by the Pentagon’s F-35 program office, according to a defense official close to the program who asked not to be named discussing relations with a supplier. He is seen as someone outside the company’s traditional aeronautics unit background who will instill disciplined business processes in the program, the official said.

The official also said Carvalho brings a more personable approach to negotiations with the Pentagon.

Asked if Lawson, who has worked at Lockheed for 26 years, left because of differences with the Pentagon, Jennifer Allen, a spokeswoman for the company, said he departed for personal reasons.

Spirit AeroSystems, Lawson’s new employer, said in its statement that he is “a well-known and highly respected leader” in the aerospace industry. The company makes fuselage sections and components for airplanes made by Boeing Co. (BA:US) and Airbus SAS, a subsidiary of European Aeronautic Defence and Space Co.

To contact the reporters on this story: Gopal Ratnam in Washington at gratnam1@bloomberg.net; Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net


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Companies Mentioned

  • LMT
    (Lockheed Martin Corp)
    • $167.74 USD
    • -0.13
    • -0.08%
  • SPR
    (Spirit AeroSystems Holdings Inc)
    • $34.28 USD
    • -0.47
    • -1.37%
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