August 11, 2000 (by Lieven Dewitte) - Lockheed Martin received a $900 million down payment from the United Arab Emirates for the sale of 80 F-16 fighters to be assembled in Fort Worth.
The money will be applied to a $2 billion performance bond that Lockheed Martin issued to the Emirates before the F-16 was sealed by a signed contract in June. The bond, unusual in international aircraft sales, obligates Lockheed Martin to pay the Emirates for delays and deficiencies in the aircraft.
The bond was the last step in four years of negotiations between the Emirates, Lockheed Martin, and the U.S. government.
The government was worried about the technology transfer to the Emirates; the F-16s will be the most sophisticated ones built in the fighter's 25-year history.
According to the terms, the Emirates can withdraw the money if it becomes dissatisfied with Lockheed's performance in producing the fighters. But the amount of money the Emirates can draw cannot exceed the amount the Emirates has paid in.
No details were given about future payments by the Emirates yesterday.
The F-16s are to be delivered to the Emirates from 2004 to 2007. The 80-plane deal will be worth $6.4 billion. The sale to the Emirates is the largest chunk of a 200-plane backlog for the Fort Worth plant, which is expected to stabilize employment at about the current level of 10, 500 workers.