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Lockheed Martin (LMT) Wins $900M F-16 Aircraft Maintenance Deal

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Lockheed Martin Corp. (LMT - Free Report) has recently secured a contract with a ceiling value of $900 million to offer depot-level maintenance and aircraft modification services for the F-16 aircraft. Per the deal terms, the company will provide aircraft modifications, unplanned drop-in maintenance, time compliance technical orders, scheduled inspections and contract field team support services.

The contract was awarded by the Air Force Life Cycle Management Center, Hill Air Force Base, UT.

Importance of the F-16 Fighting Falcon Jets

Originally manufactured by General Dynamics (GD - Free Report) , the F-16 Falcon jets became part of Lockheed Martin after it acquired the former’s aircraft manufacturing business. As the F-16 Original Equipment Manufacturer (OEM), Lockheed Martin is uniquely qualified to design, engineer, develop, integrate and sustain a complete F-16 weapons system to meet customer requirements.

The F-16 Falcon jets have significantly grown in importance on a global scale over the past few years. A total number of 4,588 aircraft have been delivered to customers across 29 nations along with numerous upgrades. Over the past couple of years, the F-16 has witnessed significant development as nations, such as Taiwan, Bulgaria, Morocco and Bahrain, have signed respective agreements to procure new F-16 aircraft. Due to the rising importance, Lockheed Martin has introduced F-16 Block 70/72 in 2020, which is the most advanced F-16 aircraft, combining numerous capabilities and structural upgrades.

Such developments and solid demand for this jet program might have been ushering in increased contract flow from Pentagon and other U.S. allies, as evident from the latest deal, which in turn are expected to boost Lockheed Martin’s profit count. 

A Robust Defense Budget to Boost Prospects

The U.S. government’s fiscal 2021 defense budget includes a significant spending plan of $56.9 billion on military aircraft.  Such a stupendous budgetary amendment reflects massive growth prospects for Lockheed Martin’s F-16 program in the days ahead.

Alongside Lockheed Martin, such overwhelming projections will boost prominent military aircraft manufacturers like Boeing (BA - Free Report) and Northrop Grumman (NOC - Free Report) in the days to come, which manufacture the advanced F-15 and B-2 Stealth Bomber, respectively, along with other fighter aircraft.

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This Zacks Rank #3 (Hold) stock has lost 6.3% in the past year compared with the industry’s decline of 23.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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