Shares of Lockheed Martin fell as president-elect Donald Trump tweeted that making F-35 fighter planes is too costly and that he will cut "billions" in costs for military purchases.
Lockheed makes the F-35 one-seat fighter aircraft for the U.S. and is a major defence contractor. The F-35 program made up 20 per cent of Lockheed's total revenue last year.
The Pentagon has ordered 90 F-35 Lightning II jets from the company in the first tranche of the program and the U.S. air force has begun the process of designating bases that will handle the stealth warplanes.
The total cost is expected to exceed $391 billion
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This is the second time in a week that Trump has blasted U.S. aircraft spending. Last week, Trump tweeted that costs to build new presidential planes by Boeing Corp. were "out of control" and ended the tweet with "Cancel order!"
Several stocks hurt by tweet
Lockheed Martin Corp. shares fell $6.42, or 2.5 per cent, to close at $253.11 US Monday.
Shares of Raytheon Co. dropped 1.7 per cent to $143.81, Northrop Grumman Corp. fell 2.7 per cent to $232.07 and General Dynamics Corp. fell 1 per cent to $173.74. Boeing Co. bucked the trend, adding 67 cents to $157.16.
The F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th.— @realDonaldTrump
Lockheed Martin has invested large sums of money to reduce the price of the F-35 stealth fighter program, a company executive said on Monday, responding to Trump's criticism.
"Since the beginning, we have invested hundreds of millions of dollars to reduce the price of the airplane by about 70 per cent since its original costing, and we project it to be about $85 million US in the 2019 or 2020 time frame," Jeff Babione, Lockheed Martin's F-35 program leader, said in a statement on the company website.
He said the company welcomes "the opportunity to address any questions the president-elect has about the program."
Babione is currently in Israel, which was expecting the first two U.S.-built F-35 fighter jets to arrive today, though bad weather in Italy had led to a delay.
Israel's F-35 squadron is expected to be the first to be operational outside the United States and will enhance its ability to attack distant targets using stealth. The two planes will be the first of 50 fighters, each priced at around $100 million, Israel's air force will receive.
Trump can propose cuts, but he must get Congress onside
Once Trump is in office, he can propose deep cuts to the F-35 or even elect to cancel the program altogether. But Congress, not the president, controls the government's purse strings and makes the final decisions about the budget.
Despite the huge cost, the program has strong bipartisan support in Congress, where lawmakers view the aircraft as essential to national security and a provider of jobs throughout the U.S.
Companies from 45 states are involved in the F-35's production, with Texas, Georgia, California, Arizona and Florida playing the leading roles in testing and manufacturing the jet fighter. The company is teamed with more than 1,250 domestic suppliers to produce thousands of components ranging from highly sophisticated radar sensors to parts of the aircraft's fuselage, according to Lockheed Martin.
Overall, the F-35 program is responsible for more than 146,000 U.S. jobs, the company said.