Lockheed Martin logged a $1.8 billion loss in the second quarter of 2025, $950 million of which came from a “critical” classified aeronautics program, company CEO Jim Taiclet told investors today.
“This particular program team discovered new insights in the quarter that required us to adjust our expected future costs on that program and then recognize the charge for doing so,” Taiclet said during a call with shareholders to discuss Lockheed’s second quarter earnings results.
“I acknowledge the losses on this classified program are significant,” Taiclet added, “Again, we are taking these charges very seriously and have initiated changes in program team management and assigned experts across the company to improve the performance and oversight of this program under a comprehensive risk identification and corrective action plan.”
The charges on the secretive aeronautics program — which is under the purview of Lockheed’s technical innovation arm Skunk Works — were revealed upon completion of a “deepened” review directed by the company’s new chief financial officer Evan Scott.
Lockheed was not able to provide specific details during the call about the program due to its classification status — and probably won’t be able to “for many years to come,” Scott said — but the company did claim the system would be in high demand for a long time.
The review was completed in conjunction with customer inputs and negotiations, current operational performance and future risk profiles, the CEO said. The analysis identified design, integration and test and other key performance challenges on the secretive program, the company said in a new release.
“This is a highly classified program that can only be described as a game changing capability for our joint U.S. and international customers, and therefore it is critical that it be successfully fielded with our enhanced oversight of this program and rapid incorporation of lessons learned,” Taiclet said. “We expect to reduce risk over the next few years as we move through the key milestones of this very advanced system.”
Based on the review, Lockheed has shifted its approach to testing and other processes, the news release states, causing significant updates in the classified program’s schedule and cost estimates. The discoveries made during the review challenge long standing assumptions about the program, company officials said.
“Our continued investment in this program reflects our ongoing confidence in its criticality for national security,” Scott said during the call. “We remain excited about the future prospects for this solution.”
The Pentagon is aware of the losses the company has taken on with the classified program, Scott added, and may be open to “figuring out ways to make it more reasonable” via a potential contract restructuring while keeping requirements intact.
Originally published Inside Defense
