Lockheed to Cut 1,200 Jobs in Its Astronautics Division

Lockheed Martin Corp. said Monday that it will cut 1,200 jobs at its astronautics division this year, or about 13% of the unit’s work force, to reduce costs after the unit experienced launch delays and other problems last year.

The division, which makes rockets and satellites, has plants at Vandenberg Air Force Base and in Cape Canaveral, Fla., but most of the cuts will come at Lockheed’s plants in Colorado, which employ more than 6,800 of the unit’s 9,300 workers. The giant defense contractor did not say how many cuts will be made in California and Florida.

On another front Monday, Lockheed failed for a sixth time to intercept a missile during a test of its missile-interceptor system, the Defense Department said.

The Theater High-Altitude Area Air Defense System, or Thaad, interceptor missile flew past its target even though it seemed to perform well up until the final seconds, the Pentagon said.

Lockheed Martin will have to pay a $15-million penalty to the government because of the failure, which analysts estimate could trim first-quarter earnings by as much as 4 cents a share. Monday’s miss also intensifies competition from No. 3 defense contractor Raytheon Co., which is proposing an alternative system mounted on Navy vessels.

The failure “opens the door wider for Raytheon to come in with a competing technology,” said Todd Ernst, a defense analyst at Prudential Securities Inc., who has a “hold” rating on Lockheed. “Lockheed Martin is a company that needs good news.”

Lockheed faces losing $20 million more if it doesn’t have two successful intercept tests by June 30, and it could see a further $40 million in penalties by Dec. 30 if it fails to meet other performance milestones, said Air Force Lt. Gen. Lester Lyles, director of the Ballistic Missile Defense Organization.

Lyles said preliminary data show the Thaad interceptor came between 30 to 90 feet of hitting its target. The reason for the failure, which came in the final second, may take weeks to determine.

Lockheed needed to succeed in the test to assure the Defense Department, investors and analysts that it is back on track after a series of program problems in 1998 and less-than-expected earnings.

“We’re disappointed at the outcome, even though it appears that a number of test objectives were achieved,” said James Fetig, a spokesman for the Bethesda, Md.-based company.

Although the Thaad missile failed to intercept its target, “this test incorporated an upgraded seeker on the missile and corrected numerous problems encountered on earlier intercept attempts,” Lyles said. “Everything seemed to work very, very well, with the exception of the end game.”

Lockheed Martin shares fell 31 cents to close at $38.56 on the New York Stock Exchange.