Faltering F-35 program compounds Lockheed Martin's woes as company profit drops, share plunges over 18% in one year

Lockheed Martin's F-35 Lightning II is currently considered as the pinnacle of military aviation. The fifth generation stealth fighter forms the cutting edge of the United States military combat aircraft as well as that of 11 other allied countries. But the American defense and aerospace manufacturer is facing a crisis with the F-35 as its biggest customer, the Pentagon, has scaled down the number of stealth fighters it will buy coupled with apprehension among a section of potential buyers like Canada.

A second-quarter profit drop of almost 80% and a pretax loss of $1.6 billion, show Lockheed Martin is flying into troubled weather. Lockheed's stock price has mirrored its financial health, registering a drop of 18.60% in the past one year. The company's stock closed at $419.39 on July 23, 2025, compared to the price of $515.20 on July 24, 2024.

The aviation major's second quarter 2025 sales stood at $18.2 billion, just a shade more than the figure of $18.1 billion in the second quarter of 2024. "Net earnings in the second quarter of 2025 were $342 million, or $1.46 per share, including $1.6 billion of program losses and $169 million of other charges. This compares to $1.6 billion, or $6.85 per share, in the second quarter of 2024. Cash from operations was $201 million in the second quarter of 2025, compared to $1.9 billion in the second quarter of 2024. Free cash flow was $(150) million in the second quarter of 2025, compared to $1.5 billion in the second quarter of 2024," the press release by Lockheed stated.


Admitting that its Aeronautics Classified Program is facing trouble, the company said, "Aeronautics has experienced design, integration, and test challenges, as well as other performance issues on this program. These trends continued into 2025 and had a greater impact on schedule and costs than previously estimated."

Its Canadian Maritime Helicopter Program (CMHP) and Türkish Utility Helicopter Program (TUHP) have also been hit by various issues, which the company claims it is trying to resolve. The two programs reported pretax losses of $570 million and $95 million respectively. Subsidiary Sikorsky, which focusses on helicopters, is also facing turbulence.

F-35 program runs into trouble

The F-35 program is facing delays with the Block 4 upgrade and the company lost the race to develop the sixth-generation fighter - the F-47 - to its rival Boeing announced by President Donald Trump on March 21, 2024.The Pentagon refused to take any more F-35 jets for much of 2023 and the first half of 2024 after Lockheed failed to integrate new software and hardware. This was due to delay with TR-3, which Lockheed calls the “backbone” of Block 4 upgrade. The new batch of F-35, albeit with a lesser capability than initially proposed, were delivered to the US military from July 2024.

General David Wayne Allvin, the United States Air Force Chief of Staff, has asked Lockheed to fix the issues in the F-35 program before more jets can be ordered and bought. "In the end, because we have limited financial resources, we need to make sure that the F-35s we buy have the capability to meet the pacing threat. So, some of the delays with respect to Block 4 and TR-3 weighed into decisions by the department,” the US Air Force top general told Defence One at the Royal International Air Tattoo in Gloucestershire, England.

Lockheed’s order book now has 24 F-35s for the U.S. Air Force, down from 48 proposed earlier in 2024. The US Navy also wants less of the F-35, its order is down to 12 from the 17 aircraft while Marines have brought down their order by two fighters.

With China deploying its fifth generation fighters - Chengdu J-20 Mighty Dragon and Shenyang J-35, the US is for the first time facing threat to its stealth fighter dominance. Recently, China also revealed that the naval variant of J-35 for its aircraft carriers was also operationally active.

To counter the growing Chinese threat, the Pentagon has made it clear that the F-35 Block 4 fight must be fully capable in all aspects including software upgrades, weapons integrations and related sensitive parts, and not depend on upgrades to showcase its potential might.

China and tax angle to Lockheed's woes

Lockheed Martin is focussed on the military sphere. With the F-35 program slowing down due to the extremely high cost of maintenance and day to day operation, it was betting on getting the sixth-generation deal. But that did not materialize

As Trump unleashed the tariff war, China responded with curbs on rare earth metals and minerals hitting the production line of the F-35 fighter aircraft.

Lockheed and U.S. tax authorities are also engaged in a fist fight. The tax authorities claim Lockheed's unpaid tax bill stands at $4.6 billion, which the company plans to pursue legally.