Lockheed Says Qatar Budget Woes Could Delay Defense Deal

By Doug Cameron 

The head of Lockheed Martin Corp. said Tuesday that domestic budget pressures could delay Qatar from signing a multibillion defense deal this year, though she expressed confidence that the slide in energy prices wouldn't dent Lockheed's efforts to boost exports.

The world's largest defense company by revenue has included the $6 billion sale of two of its Thaad missile-defense systems to Qatar in a backlog expected to be as high as $95 billion by year-end, but Chief Executive Marillyn Hewson said the proposed deal was one of two on an internal watch list.

Oil-rich Middle Eastern nations and Asian states alarmed by China's military buildup have helped cushion Western arms makers from domestic military budget cuts, but the slide in energy prices has led to concerns among investors that deals could stall.

Ms. Hewson had previously expressed confidence that a welter of security risks would, if anything, boost exports as countries spent more on munitions and high-end defense systems such as combat jets and missile defense.

She still expects Qatar to buy the Thaad, which can destroy ballistic missiles far from their target. Qatar has boosted military spending almost fourfold in recent years to protect its huge gas fields and big infrastructure projects such as stadiums for the football World Cup in 2022.

"It's just a matter of them balancing their budget," said Ms. Hewson of Qatar's plans, adding that there were no signs of overseas buyers cutting purchases of "essential" military equipment.

Lockheed has already sold Thaad to the United Arab Emirates and Oman. South Korea has also expressed interest in the system, which is already in use by the U.S. Army. Beyond missile defense, the company's other big export opportunities include combat jets -- it has discussed building an assembly line in India -- and Sikorsky helicopters.

Write to Doug Cameron at [e-mail]

(END) Dow Jones Newswires

April 26, 2016 13:50 ET (17:50 GMT)

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