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Lockheed Martin Wins $743M Navy Contract for F-35 Aircraft
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Defense major Lockheed Martin Corp.’s (LMT - Free Report) Aeronautics business division recently clinched a modification contract from the U.S. Navy for the F-35 Lightening II Joint Strike Fighter aircraft. The original advance acquisition contract involved low-rate initial production of Lot 9 F-35 Lightening II jets.
Details of the Deal
Valued at $743.2 million, this deal promises to offer additional funding and establish not-to-exceed (NTE) prices for diminishing manufacturing and material shortages redesign and development, estimated post production concurrency changes and country unique requirements. Moreover, this modification will establish NTE prices for one F-35A aircraft and one F-35B aircraft for a non-U.S. Department of Defense (DoD) participant in the F-35 program.
The contract was awarded by the Naval Air Systems Command, Patuxent River, MD. Majority of the work will be carried out in Fort Worth, TX; El Segundo, CA; Warton, U.K.; Orlando, FL; and many other regions across the globe.
The modification will utilize fiscal 2015 aircraft procurement (Air Force, Marine Corps, and Navy) and non-U.S. DoD participant and foreign military sales funds. Work related to this agreement will be over by Dec 2019.
Lockheed Martin’s F-35 Lightning II is a single-seat, single-engine 5th Generation fighter aircraft, which comes with an advanced stealth feature combined with enhanced fighter speed and agility, fully fused sensor information, network-enabled operations and advanced sustainment. Three variants of F-35 are set to replace 5 fighter jets for the U.S. Air Force, Navy and Marine Corps, as well as a variety of fighter jets for at least ten other countries.
With Lockheed being the primary partner, the F-35 program has been supported by an international team of leading aerospace majors. While Northrop Grumman Corp. (NOC - Free Report) contributed its expertise in carrier aircraft and low-observable stealth technology to this program, BAE Systems plc’s (BAESY - Free Report) short takeoff and vertical landing experience, and air systems sustainment supported the jet’s combat capabilities. Pratt & Whitney, a unit of United Technologies Corporation , provided F-35s with the F135 propulsion system, the world's most powerful fighter engine.
Our View
Built with the combined expertise of some of the best corporations in the aerospace-defense space, F-35 is the world's largest defense program. Excluding the temporary stand-down of 15 jets in the U.S. and Norwegian fleet for addressing insulation issues in the fuel tank’s avionics cooling lines, initiated late September, the overall F-35 program has been making progress on most fronts of late..
As of Jun 2016, Lockheed Martin has rolled out 174 F-35s which have together accounted for 68,000 flight hours, marking this aircraft’s achievement of operational benchmarks. Going forward, Lockheed Martin aims at increase its deliveries of F-35 to 53 this year and has already supplied approximately 180 since the inception of the program. Management has also adopted a cost-saving initiative that is expected to reduce sustainment costs for F-35 by 10% over the next couple of years. This will result in cost savings of $1 billion over a five-year period. We believe that the latest modification contract will help in the company meet these targets.
Zacks Rank
Currently, Lockheed Martin carries a Zacks Rank #4 (Sell). The company’s earnings estimates have dropped 6% for 2016 and 2.4% for 2017, in last 60 days.
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Lockheed Martin Wins $743M Navy Contract for F-35 Aircraft
Defense major Lockheed Martin Corp.’s (LMT - Free Report) Aeronautics business division recently clinched a modification contract from the U.S. Navy for the F-35 Lightening II Joint Strike Fighter aircraft. The original advance acquisition contract involved low-rate initial production of Lot 9 F-35 Lightening II jets.
Details of the Deal
Valued at $743.2 million, this deal promises to offer additional funding and establish not-to-exceed (NTE) prices for diminishing manufacturing and material shortages redesign and development, estimated post production concurrency changes and country unique requirements. Moreover, this modification will establish NTE prices for one F-35A aircraft and one F-35B aircraft for a non-U.S. Department of Defense (DoD) participant in the F-35 program.
The contract was awarded by the Naval Air Systems Command, Patuxent River, MD. Majority of the work will be carried out in Fort Worth, TX; El Segundo, CA; Warton, U.K.; Orlando, FL; and many other regions across the globe.
The modification will utilize fiscal 2015 aircraft procurement (Air Force, Marine Corps, and Navy) and non-U.S. DoD participant and foreign military sales funds. Work related to this agreement will be over by Dec 2019.
LOCKHEED MARTIN Price
LOCKHEED MARTIN Price | LOCKHEED MARTIN Quote
F-35 Attributes
Lockheed Martin’s F-35 Lightning II is a single-seat, single-engine 5th Generation fighter aircraft, which comes with an advanced stealth feature combined with enhanced fighter speed and agility, fully fused sensor information, network-enabled operations and advanced sustainment. Three variants of F-35 are set to replace 5 fighter jets for the U.S. Air Force, Navy and Marine Corps, as well as a variety of fighter jets for at least ten other countries.
With Lockheed being the primary partner, the F-35 program has been supported by an international team of leading aerospace majors. While Northrop Grumman Corp. (NOC - Free Report) contributed its expertise in carrier aircraft and low-observable stealth technology to this program, BAE Systems plc’s (BAESY - Free Report) short takeoff and vertical landing experience, and air systems sustainment supported the jet’s combat capabilities. Pratt & Whitney, a unit of United Technologies Corporation , provided F-35s with the F135 propulsion system, the world's most powerful fighter engine.
Our View
Built with the combined expertise of some of the best corporations in the aerospace-defense space, F-35 is the world's largest defense program. Excluding the temporary stand-down of 15 jets in the U.S. and Norwegian fleet for addressing insulation issues in the fuel tank’s avionics cooling lines, initiated late September, the overall F-35 program has been making progress on most fronts of late..
As of Jun 2016, Lockheed Martin has rolled out 174 F-35s which have together accounted for 68,000 flight hours, marking this aircraft’s achievement of operational benchmarks. Going forward, Lockheed Martin aims at increase its deliveries of F-35 to 53 this year and has already supplied approximately 180 since the inception of the program. Management has also adopted a cost-saving initiative that is expected to reduce sustainment costs for F-35 by 10% over the next couple of years. This will result in cost savings of $1 billion over a five-year period. We believe that the latest modification contract will help in the company meet these targets.
Zacks Rank
Currently, Lockheed Martin carries a Zacks Rank #4 (Sell). The company’s earnings estimates have dropped 6% for 2016 and 2.4% for 2017, in last 60 days.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>