The defense contractor’s stock surged 7% to an all-time high after the Pentagon awarded a new contract to Northrop to build the next Long Range Strike Bomber.
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The selection comes as a disappointment to a Boeing and Lockheed Martin as the two companies had teamed up to offer their own solution to the project.
Since the contract was announced, deal analysts estimated its value at between $60 billion to $80 billion if the US Air Force buys all 100 stealth bombers as planned.
The plane will be Air Force’s first new bomber since the Cold War and will also be one of the biggest weapons system in the USA of the next decade.
Northrop’s biggest challenge appears to be integrating the significant pre-contract design and development work done on the plane by the Air Force’s Rapid Capabilities Office, a secretive team that handles “black” programs like the X-37B space plane.
No word yet how this announcement could affect Northrop Grumman’s Lake Charles Maintenance and Modification Center, located at Chennault. The LRS-B is created to replace the Air Force’s aging fleets of bombers – ranging in age from 50+ years for the B-52 to 17+ years for the B-2 – with a long range, highly survivable bomber capable of penetrating and operating in tomorrow’s anti-access, area denial environment. Though the “flyaway” cost of each aircraft (what it cost to actually manufacture and deliver each plane once development was done, excluding all the development costs) was advertised at $566 million per aircraft, the GAO reported the actual cost per aircraft (with the inclusion of software and spare parts) was $929 million. From there, the Pentagon could elect to order as many as 100 new bombers in all, putting the full cost of the program close to $80 billion. It has capped the program’s production cost at $550 million in 2010 dollars.
Northrop, maker of the current B-2 bomber and Global Hawk unmanned planes, reported a 9 percent rise in third-quarter net profit to US$516 million, or US$2.75 per diluted share, from US$473 million, or US$2.26 per share a year earlier. Had Northrop Grumman lost the contract, it would have likely led to downsizing, divestment or acquisition by a competitor. Air Force officials and experts alike have expressed concerns to Defense News over the last several months that the service is not doing enough to pave the way for the program on the Hill.
The new stealth bomber is expected to enter service by the mid-2020s. And it collaborated with Lockheed Martin on the F-22 stealth fighter.
Northrup Grumman beat out a powerhouse alliance of Lockheed Martin and Boeing in the race to deliver the new Long-Range Strike Bomber.
The USAF wants a durable, stealthy aircraft that is able to fly deep into enemy territory and attack hidden or mobile targets, according to Bloomberg.
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“We will have further discussions with our customer before determining our next steps”, said the press release from Boeing and Lockheed.
