Hmmm, this should weigh on the Dow(n) come Monday, seeing how BA's in the Dow and Lockheed-Martin isn't:
quote.bloomberg.com
10/26 16:39
Lockheed Beats Boeing for $200 Bln Fighter Program (Update1)
By Tony Capaccio
Washington, Oct. 26 (Bloomberg) -- Lockheed Martin Corp. beat out Boeing Co. for the contract to develop the Joint Strike Fighter, the most expensive program in military history with a potential value of $200 billion, the Pentagon said.
The program calls for building as many as 3,000 of the aircraft, a warplane that would replace Air Force, Navy and Marines F-16, A-6 and F-14 fighters in the U.S. and the GR-7 in Britain's Royal Navy.
Lockheed, the biggest defense contractor, will begin a $25 billion, eight-year development phase. Initial production may begin in 2005. Full production would start in 2008 and continue into the 2020s.
``Lockheed's victory is the most important competitive success win in the last decade,'' said Loren Thompson, a defense analyst with the Lexington Institute, a Washington-based research institute. Without the decision, Lockheed's ``future in the aircraft sector was doubtful,'' he said.
The victory shouldn't have a great impact on Lockheed Martin shares, said Paul Nisbet, a defense analyst with JSA Research Inc.
``Lockheed Martin stock has risen in expectation of a win,'' he said. The shares have soared 43 percent this year. Lockheed today said it had a third-quarter profit of $213 million after reducing expenses, paring assets and selling more fighter aircraft.
Net income was 49 cents a share. In the year-earlier quarter, Lockheed had a loss of $704 million, or $1.74, after almost $1 billion in expenses related to a loss on the sale of a business. Sales rose 7.1 percent to $6.38 billion. Per share profit, excluding some items, will rise 20 percent next year.
Bonanza for Fort Worth
Lockheed says the JSF win would add 2,000 jobs to its Fort Worth, Texas-based aeronautics unit, which employs about 11,000 people. The impact on the Fort Worth area is projected to be $4.16 billion in annual spending and 23,607 more jobs.
The program may be the last big military contract awarded for manned aircraft, analysts have said. Lockheed will likely become the leading maker of fighter jets.
Shares of Bethesda, Maryland-based Lockheed rose $1.92 to $50.83 on trading of 10.4 million shares on the New York Stock Exchange. Shares in Boeing, the second-largest U.S. defense contractor, rose $1.78 to $37.68 on trading of 11.3 million shares.
Lockheed Martin's top industry partners are BAE Systems PLC., Northrop Grumman Corp., TRW Inc., General Electric Co., Alcoa Inc., Litton Guidance and Control Systems and Honeywell International Inc.
Figuring Costs
The program envisions 1,763 aircraft for the Air Force, 609 for the Marine Corps, up to 480 for the Navy and 60 for the Royal Navy. Additional aircraft may be bought by Australia, Belgium, Canada, Denmark, the Netherlands, Norway and Italy.
The JSF has been touted for its low cost. The so-called ``flyaway cost'' in 2001 dollars is $30.5 million for the Air Force version, up to $38 million for the Navy model and $41 million for the Marine Corps short-take-off-and-landing model, according to a Congressional Research Service report.
Flyaway cost includes the airframe, engine and avionics. It doesn't include the cost of equipment and manuals to maintain the aircraft, initial spare parts and early research.
The Pentagon has never disclosed the plane's ``acquisition cost'' -- a more inclusive measure of what it will cost the taxpayer.
Boeing's Move
Boeing entered the JSF competition in 1996 after surprising experts by beating then-rival McDonnell Douglas Corp. in the competition to design the plane. St. Louis-based McDonnell Douglas later agreed to be acquired by Boeing for $13.3 billion.
Missouri Republican Senator Christopher ``Kit'' Bond said three weeks ago that the Pentagon should maintain two production lines for the fighter. His stance spurred speculation that Bond - who represents Missouri, where Boeing's military aircraft unit is based -- expected Boeing to lose.
Designing one plane for all the services has been difficult because they each have various missions that require particular types of aircraft. The Navy wants aircraft with enough weight to land on aircraft carriers, while the Air Force is interested in lighter planes that can travel long distances. The three models, although not identical, are envisioned to have 80 common parts, including airframe, avionics and engine.
United Technologies Corp.'s Pratt & Whitney will provide the engines for the aircraft. |
