Lockheed Martin Corp.’s ( LMT Quick Quote LMT - Free Report) business segment, Aeronautics, recently secured a contract to procure recurring logistics services for delivered F-35 jets. The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD. Details of the Deal
Valued at $1.8 billion, the contract is expected to be completed by December 2021. Per the terms of the deal, Aeronautics will provide ground maintenance activities, action request resolution, depot activation activities and automatic logistics information system operations. It will also offer maintenance, reliability, maintainability and health management implementation and support, supply chain management and activities to provide and support pilot and maintainer initial training.
Majority of the work related to this deal will be performed in Fort Worth, TX.
Rise in Demand Aids F-35 Program
The rise in global terrorism and adverse geopolitical situations have increased the need for enhancing the nation's defense budget, a major portion of which is allocated to combat aircraft. The F-35 program is supported by an international team of leading aerospace majors, such as
Northrop Grumman ( NOC Quick Quote NOC - Free Report) , BAE Systems ( BAESY Quick Quote BAESY - Free Report) and Pratt & Whitney, a unit of Raytheon Technologies ( RTX Quick Quote RTX - Free Report) . Notably, Northrop Grumman rendered its expertise in carrier aircraft and low-observable stealth technology to this program. Also, BAE Systems’ short takeoff and vertical landing experience, and air systems sustainment supported the jet’s combat capabilities. Pratt & Whitney offered its combat-proven engine to this jet.
Such features have enabled the F-35 jet to dominate the combat aircraft market, buoyed by solid demand as is evident from the frequent contract wins involving F-35 program and its associated upgrades, both from Pentagon and other U.S. allies. The latest contract win is a bright example of that.
As of Mar 28, 2021, Lockheed Martin delivered 628 F-35 airplanes since the program's inception with 339 jets still in backlog. This surely boosts sales expectation for the Aeronautics business segment in the coming days.
Moreover, the production of F-35 jets is expected to continue for many years, given the U.S. government's current inventory target of 2,456 aircraft for the Air Force, Marine Corps and Navy. Consequently, we expect Lockheed Martin to witness more order inflows for F-35 and its associated upgrades, like the latest one, which, in turn, should bolster this defense contractor’s top line.
Price Movement and Zacks Rank
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