DTN News - JAPAN DEFENSE NEWS: What If Japan Dumps Lockheed Martin?
(NSI News Source Info) TORONTO, Canada - March 7, 2012: Japan recently made its first public announcement that it may cancel its big order for Lockheed Martin's (NYS: LMT) F-35 fighter planes if the company adds to the pre-decided price or extends the delivery period of these planes. The cancellation can potentially wipe out more than $5 billion that Lockheed is expected to earn from the deal.
A flashback
After the death of North Korean dictator Kim Jong Il late in 2011, uncertainty and instability cropped up in the Korean peninsula, an area where 1.7 million troops from North Korea, South Korea, and the U.S. are stationed. In the wake of North Korea improving its ballistic missiles and both Russia and China developing stealth fighters, Japan -- with the world's sixth-largest defense budget -- also planned on improving its air defense network.
Japan placed an order to buy 42 F-35 fighter jets, costing between $114 million and $122 million per unit. This marked the F-35's first win in a competitive tender, as well as Japan's costliest fighter jet procurement. The company is expected to begin delivery of the planes in 2016, beginning with four jets.
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