The U.S. Air Force awarded Northrop Grumman Corp. a contract worth up to $60 billion Tuesday to build the nation’s next-generation stealth bomber – a project that is expected to be a major boon to the Southland’s aerospace sector with much of the assembly work likely to be done in the Palmdale area.
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Investors had increasingly viewed Northrop’s prospects as tied to the outcome of the award by the Air Force of the contract to build the new long-range bomber. An engineering and manufacturing development (EMD) phase will cost an estimated $21.4 billion in Fiscal Year 2010 dollars, the cost benchmark the service is using for the program. There’s also the question of whether upgraded nuclear bombers are needed at all with the Cold War decades in the past, though renewed tensions with Russian Federation and a technologically sophisticated Chinese force pose new challenges that may not have existed a decade ago.
“Second, at face value Boeing had more experience producing aircraft and Lockheed Martin (F-22 and F-35) had experience with stealth, Northrop Grumman’s competitors were likely more capable and financially sound”. Eventually, the Air Force would buy 100 of the new bombers valued at $550 million each in 2010 dollars.
Overall, the company posted a profit of $516 million, or $2.75 a share, up from $473 million, or $2.26 a share, a year earlier.
He said the average procurement cost for the bombers was $564 million per aircraft for 100 bombers in 2016 dollars.
It is understood that the aircraft – designated the Long-Range Strike Bomber (LRS-B) – will cost $564m per unit and the first aircraft are aimed to go operational in 2025.
According to a report on the Air Force’s website, the contract will paid out in two parts.
246-a-07-(Air Force Secretary Deborah Lee James, at news conference)-“high-end threat environment”-Air Force Secretary Deborah Lee James says the service needs this long-range strike bomber’s modern capabilities”.
For the defense companies who sought the contract, the stakes were high. The announcement took industry experts by surprise, with Northrop considered the underdog to get the lucrative contract.
“The capabilities of the LRS-B will ensure the United States is able to hold any target on the globe at risk while providing our combatant commanders critical operational flexibility across the range of military operations”, said Gen. Mark Welsh, Air Force chief of staff.
“Going forward we will return to our prior approach of assessing our repurchases from time to time in the context of our capital deployment strategy which has not changed”, Bush said during the call.
The Pentagon is counting on the new bomber’s radar-evading design, which should allow the aircraft to penetrate the sophisticated air defenses that Russian Federation and China are deploying in growing numbers.
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Defense stocks were broadly ahead of the wider market Wednesday in the wake of upbeat earnings, a potential Pentagon budget deal and the bomber award, with only Boeing and Lockheed and Boeing losing ground.
