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Lockheed Martin Will Lay Off 1,000 Workers in Aeronautics Division

March 9
6:56 AM 2016

Lockheed Martin will cut workers from its aeronautics division. The company offered voluntary lay off to its employees in Texas, Georgia, California, Mississippi, West Virginia and Maryland.

The Bestheda, Maryland-based company is the largest defense company in the world, and its aeronautics division, Lockheed Martin Aeronautics Company is the unit that produce military aircrafts. Its aircraft division is famous for its military transport aircraft C-130 Hercules, fighter aircraft F16, stealth attack aircraft F-117, tactical fighter F-22 and multirole fighter F-35.

Following a continuous budget pressure from Pentagon and Congress, Lockheed Martin will trim its overhead cost in its aeronautics division. Bloomberg reported that in last October Lockheed Martin Chief Executive Officer Marillyn Hewson told investors, "We are always looking at our business structure and looking at different excursions we should take in order to keep our business competitive within the business environment that we operate in."

Lockheed Martin Aeronautics Company is the largest division and generate one-third of the company's revenue. Bloomberg Intelligence defense analyst Douglas Rothacker said in an e-mail that Lockheed Martin is looking to bolster its profit margin in aeronautics and speed up the production of F-35 as the largest weapons system of Pentagon.

Following the announcement, ABC News reported on Tuesday, Lockheed Martin's stock was up more than 2% in after-hours trading.

The company started to face a drawback in its military contract last year. When Air Force selected competitor Northrop Grumman to be contractor to develop B-21 long range stealth bomber in October 2015. Lockheed Martin and Boeing Co. questioned the decision and submitting formal complaints to the Government Accountability Office.

Following the complaint, Los Angeles Times reported GAO rejected protest from Lockheed Martin and Boeing last month. GAO upheld the Air Force decision and said that review from Air Force for the bids was reasonable. The federal agency also said there is no reason to reject the deal.

In the next step, Air Force has announced seven subcontractors to accompany Northrop Grumman to build the new B21 bomber in an 80 billion program. The seven subcontractors are Pratt & Whitney, BAE Systems, GKN Aerospace, Janicki Industries, ATK Inc., Rockwell Collins Inc. and Spirit Aerosystems.

Lockheed Martin has been under scrutiny by Congress for years especially with delays in F-35 program, When Pentagon selected the company to be contractor for F-35 program in 2009, Lockheed Martin experienced multiple cost overruns and developmental delays. Such delays degrade company's credibility as U.S. defense contractor.

In order to strengthen its revenue, Lockheed Martin decided to cut 1,000 jobs in its aeronautics division. Lockheed Martin offers voluntary lay off to employees in Texas, Georgia, California, Mississippi, West Virginia and Maryland.

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