Lockheed Martin Wins $153M Deal To Aid F-35 Aircraft Program
Zacks Investment Research | Dec 09, 2019 09:25PM ET
Lockheed Martin Corp.’s (NYSE:LMT) business segment, Aeronautics, recently secured a modification contract for procuring special tooling and special test equipment involving the F-35 Lightning II aircraft program. The procurements will meet current and future F-35 Lightning II low-rate initial production as well as full-rate production rates.
The deal has been awarded by the Naval Air Systems Command, Patuxent River, Maryland. Valued at $153.4 million, the contract will cater to the U.S. Air Force, Navy, Marine Corps and non-U.S. Department of Defense (DoD) participants as well as foreign military sales customers. Work related to the deal is scheduled to be over by July 2022.
Majority of the task will be carried out in Rome, Italy; Redondo Beach, CA, and Fort Worth, TX.
Importance of F-35 in the Fighter Jet Market
With increased cross-border tensions gripping varied nations across the globe, both developed and developing nations have been ramping up their defense arsenal over the past decade. Notably, military jets comprise major part of the weapon portfolio.
Currently, Lockheed Martin’s supersonic, multi-role fighter jet, F-35, is being used by the defense forces of the United States and 11 other nations.
According to Forecast International, a total of 3,401 fighter aircraft are expected to be produced from 2019 through 2028. Notably, the total number of fighters to be produced over the next decade is 17.2% higher than the number of aircraft produced during the previous 10 years. F-35 is anticipated to be the largest fighter program over the next decade.
Of the nearly 3,400 fighters expected to enter the production lines during the next 10 years, 1,548 jets are expected to be F-35s, representing 45.5% of the market. This clearly highlights the importance of the F-35 program in the global fighter jet market.
What Favors Lockheed Martin?
The F-35 is Lockheed Martin’s largest program that generates more than 25% of its total sales. Last year, the program fueled annual revenue growth by 19.6% at the company’s Aeronautics division. Keeping up with this trend, we may expect the latest contract win to help the Aeronautics unit deliver similar or even better performance in the upcoming quarters.
Taking into account the F-35 program’s solid estimated production rate, as mentioned above, the latest contract win should further provide a boost to this program in the coming days.
Such developments reflect solid prospects for Lockheed Martin’s F-35 program, which are likely to bolster the company’s profit margin.
Price Movement
In a year’s time, shares of Lockheed Martin have gained 31.2% compared with theOriginal post
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