Lockheed Martin Corporation (NYSE:LMT) has recently been awarded a modification contract for its F-35 Lightning II aircraft by the Naval Air Systems Command, Patuxent River, MD.
Details of the Contract
Valued at $663.1 million, the contract is slated for completion by June 2027. Under the agreement, Lockheed will provide recurring logistics support to bolster the sustainment efforts of the F-35 Lightning II Joint Strike Fighter Air Systems.
This support encompasses various ground maintenance activities, resolution of action requests, depot activation operations, maintenance of the automatic logistics information system, reliability and maintainability enhancements, supply-chain management, pilot and maintainer training, and training system maintenance.
A significant portion of the work associated with this contract will be carried out in Fort Worth, TX.
Significance of F-35 Jets
The F-35 is renowned as the most lethal, survivable, and interconnected fighter jet globally. Its capability to securely connect high-tech platforms facilitates information sharing across all domains—air, land, sea, space, and cyber. Such outstanding features have consistently attracted substantial contract wins for Lockheed Martin, further solidifying the F-35 program as a major revenue driver for the United States’ largest defense contractor.
In 2023, the F-35 program accounted for the largest share of revenue in Lockheed’s Aeronautics business unit, contributing 64% of the segment’s net sales. Since its inception, Lockheed has delivered 992 F-35 aircraft, with 373 jets in the backlog as of December 31, 2023.
Looking ahead, Lockheed anticipates delivering 147-153 jets in 2024 and 156 jets annually in 2025 and beyond. Successful delivery of F-35 jets, coupled with the recent contract agreement, is poised to significantly bolster Lockheed’s revenues in the forthcoming quarters.
Growth Prospects
Amidst prevailing geopolitical tensions worldwide, nations are accelerating defense purchases to enhance their military capabilities. This surge in demand for fighter jets, an essential component of a country’s defense arsenal, bodes well for Lockheed and other prominent combat jet manufacturers.
According to a report by Mordor Intelligence, the global military aviation market is projected to grow at a CAGR of 5.23% during 2024-2030. Such forecasts indicate substantial growth opportunities for leading players like Lockheed, whose fighter jet portfolio encompasses the C-130 Super Hercules, F-16 Fighting Falcon jet, and F-35 jets.
Recent Developments and Peer Opportunities
In addition to the F-35 program, Lockheed has achieved significant milestones recently, including the delivery of the first C-130J-30 Super Hercules tactical airlifters with Block 8.1 upgrades to the Royal Norwegian Air Force. Furthermore, the Czech Republic government signed a Letter of Offer and Acceptance to procure 24 5th Generation F-35 Lightning II aircraft.
Other defense players poised to benefit from the expanding military aviation market include Airbus SE (EADSY), Textron (TXT), and Northrop Grumman (NOC). Airbus’ military aircraft portfolio includes the A400M, C295 tactical transporter, A330 Multi Role Tanker Transport, and Eurofighter, while Textron manufactures the Beechcraft T-6 training aircraft and Beechcraft AT-6 light-attack aircraft. Northrop Grumman has been a pioneer in the development of manned aircraft, offering solutions ranging from fighter jets to surveillance and electronic warfare platforms.
Price Performance
In the past month, Lockheed’s shares have gained 1.1%, outperforming the industry’s 0.4% growth. This recent contract win underscores Lockheed’s continued leadership in the defense industry and its commitment to supporting crucial defense programs like the F-35 Lightning II.
Featured Image: Megapixl
