According to a Reuters report that cited sources familiar with the matter, U.S. President Joe Biden is looking to cut F-35 jet orders by the Pentagon by 18% next year. Following the news, shares of Lockheed Martin (NYSE:LMT) are down 2.5%.
This cut comes in response to the defense spending cap of $895 billion by Congress. The budget reduction will lead to an estimated $1.6 billion drop in spending on jets, with the Pentagon order for stealth jets expected to come in below 70, instead of the 83 previously expected.
Around 25% of LMT’s revenue comes from the jet program. With each jet costing between $80-120 million, the earlier projected order of 83 jets was set to bring in $9.8 billion. Lockheed said they look forward to working with the administration and Congress on the 2025 budget.
With the budget request to be revealed on March 11, negotiations between the administration and Defense Secretary Lloyd Austin are almost complete, though there could still be a change to the final amount, Reuters reported the sources as saying. The cap on the military budget is resulting in large cuts to various programs, also slowing down stock replenishment efforts, with weapons sent to Ukraine and Israel in need of replacement.