Lockheed Martin Corporation (NYSE:LMT ) warned Friday that it could face continued pressure from the Trump administration to cut costs for its F-35 fighter jets, which would eat into margins and perhaps reduce earnings.

Written by Stocknews.com

The cost of the planes first came into question back in mid-December, when President Trump tweeted that “The F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th.” Lockheed responded back then with the following statement:

Whoever has it will have the most advanced air force in the world, and that’s why we’re building the F-35. It’s important that the U.S. and our partners have this aircraft. It’s a great value and we look forward to any questions the president-elect may have.

Fast forward to mid-January, when Lockheed indeed bowed to Trump and agreed to cut the costs of the program. The company said then that “[We] are close to a deal that will bring the cost down significantly from the previous lot of aircraft to the next lot of aircraft and moreover it’s going to bring a lot of jobs to the United States.”

Now today, LMT says the program could face even further discounts in the future:

“There is also uncertainty regarding actions that may be taken by the new Presidential Administration in light of recent criticisms of the F-35 program and other large defense programs. President Trump has publicly expressed concerns over past cost overruns and delays in the program as well as overall program cost and has publicly requested that a competitor price out an alternative. Defense Secretary Mattis recently ordered a review of the program, including a comparison review of the F-35C carrier variant with a fourth generation alternative. Our Chairman, President and Chief Executive Officer has had discussions with President Trump on the importance of the F-35 program and our commitment to cut costs. However, we may continue to face pressure to reduce costs from the new Presidential Administration relating to the F-35 program and ongoing contract negotiations.”

Lockheed also noted that the F-35 program is its largest revenue generator, representing a whipping 23% of its total net sales in 2016. In future years, the program is expected to represent an even higher percentage of sales, so the stakes are very high.

Lockheed Martin Corporation shares were unchanged in premarket trading Friday. Year-to-date, LMT has gained 3.30%, versus a 3.16% rise in the benchmark S&P 500 index during the same period.

LMT currently has a StockNews.com POWR Rating of A (Strong Buy), and is ranked #3 of 74 stocks in the Air/Defense Services category.