Lockheed Martin Corp.’s (NYSE:LMT) Aeronautics division has recently been awarded a modification contract related to its F-35 Lightning II fighter aircraft. This contract was granted by the Naval Air Systems Command located in Patuxent River, MD.
F-35 Jet Program Contract Details
Valued at $175.9 million, the contract is slated for completion by December 2023. The latest modification expands Lockheed’s responsibilities to procure initial spares essential for supporting the delivery of F-35 jets from the 15th to 17th production lots.
These initial spares encompass global spares packages, base spares packages, deployment spares packages, and an afloat spares package. The contract will serve both Foreign Military Sales customers and non-U.S. Department of Defense participants.
Significance of F-35 for Lockheed Martin Lockheed Martin holds a dominant position in the global military aircraft sector thanks to its F-35 fleet. The stealth capabilities and advanced features of the F-35 make it an attractive choice for numerous nations. The company’s continuous efforts to enhance and modernize the aircraft using cutting-edge technologies to meet contemporary warfare requirements have significantly boosted demand.
The F-35 program continues to be the primary revenue generator for Lockheed’s Aeronautics business unit, accounting for 66% of the segment’s net sales in 2022.
As of June 25, 2023, Lockheed has delivered 944 F-35 aircraft since the program’s inception, with 421 jets in the backlog. This, coupled with the recent contract win, is expected to contribute to strong sales growth for the segment.
Looking ahead, Lockheed anticipates delivering 97 jets in 2023, surpassing the earlier projected delivery range of 147-153 for 2024. The jet deliveries for 2025 and beyond are still estimated at 156, further bolstering the company’s revenues from the military aircraft sector.
Growth Prospects
With widespread geopolitical tensions around the world, nations are actively increasing defense expenditures to enhance their military capabilities. This heightened demand for fighter jets, a crucial component of a country’s defense arsenal, presents significant opportunities.
According to projections from Mordor Intelligence, the global military aircraft market is expected to witness a CAGR of 7.37% during the 2023-2028 period. These projections indicate substantial opportunities for Lockheed to capitalize on the expansion of the military aircraft market, given its portfolio of combat-proven jets such as the F-16 and F-35 fighter aircraft.
Other notable defense industry players involved in military aircraft manufacturing include Northrop Grumman, Airbus Group, and Textron. These companies are also well-positioned to benefit from the growth prospects within the military aircraft market.
Northrop Grumman’s Aeronautics Systems unit specializes in the design, development, production, integration, sustainment, and modernization of advanced aircraft systems. The Mission Systems segment offers advanced mission solutions and multifunction systems.
Airbus Group’s military aircraft offerings include the A400M, C295 tactical transporter, A330 Multi Role Tanker Transport, and the Eurofighter, a highly advanced swing-role fighter.
Textron manufactures military aircraft such as the Beechcraft T-6 training aircraft and the Beechcraft AT-6 light-attack aircraft. Its subsidiary, Able Aerospace Services, provides component and maintenance services for both commercial and military fixed and rotor-wing aircraft.
Price Movement
Lockheed’s stock has demonstrated strength, gaining 4.9% in the past 12 months, outperforming the industry’s 3.8% decline.
Featured Image:
