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Lockheed Martin (LMT) Secures Navy Deal to Upgrade F-35 Jets
May 30, 2018, 05:47:00 PM EDT By Zacks Equity Research, Zacks.com
Lockheed Martin Corp. 's LMT Aeronautics business segment has secured a modification contract to upgrade F-35 Lightning II aircraft. Work related to the deal is scheduled to be over by June 2021.
Valued at $20 million, the contract was awarded by the Naval Air Systems Command, Patuxent River, Maryland. Per the deal, the company will deliver additional radar upgrades for the Block 3F software integrated in the F-35 jets.
Notably, the project includes 58% of the work for the U.S. Air Force and 42% for Marine Corps. Fiscal 2016 aircraft procurement (Air Force and Marine Corps) will be utilized to complete the task at Fort Worth, TX.
Lockheed Martin's F-35 Lightning II is a single-seat, single-engine 5th Generation fighter aircraft, which comes with an advanced stealth feature combined with enhanced fighter speed and agility, fully-fused sensor information, network-enabled operations and advanced sustainment. Currently, three variants of F-35 are set to replace five fighter jets for the U.S. Air Force, Navy and Marine Corps as well as a variety of fighter jets for at least 10 other countries.
With Lockheed Martin being the primary partner, the F-35 program has been supported by an international team of leading aerospace majors. Notably, Northrop Grumman NOC rendered its expertise in carrier aircraft and low-observable stealth technology to this program, BAE Systems' BAESY short takeoff and vertical landing experience, and air systems sustainment supported the jet's combat capabilities. Also, Pratt & Whitney, a unit of United Technologies UTX , provided F-35s with the F135 propulsion system - the world's most powerful fighter engine.
The F-35 program is Lockheed Martin's largest program, which generated 24% of its total net sales in first quarter of 2018. As of May 14, 2018, the company delivered more than 290 F-35 jets to the United States and its allies.
However, critics have condemned this program as the costliest military program for the U.S. government. It was only after President Trump's intervention, in February 2017, that Lockheed Martin ultimately announced its decision to cut down F-35's cost significantly.
Now, the company's current cost-saving initiative to lower sustainment costs for F-35 project is expected to result in cost savings of $1 billion over a five-year period. In sync with this, per a recent report by Lockheed Martin, it targets to reduce the cost of an F-35A to $80 million by 2020, with production enhancements.
Also, additional improvements implemented in these planes like the software upgrades, which were a part of this latest contract, will allow the company to further reduce the cost of this program. Moreover, with the U.S. government's current inventory objective of 2,456 F-35 aircraft coupled with its reduced price we may expect to witness a continued ramp up in the production of these jets, in coming days. No doubt, Lockheed Martin enjoys a solid growth prospect for F-35 program, which in turn, will surely boost its profit margin.
Underpinning the F-35’s unrivaled capabilities is more than 8 million lines of software code – more than four times the amount of the world’s first 5th generation fighter, the F-22 Raptor. From flight controls to fusing together the F-35’s sensor data to form a clear and comprehensive picture of the battlespace, software is essential.
F-35 software enables:
- Flight controls
- Radar functionality
- Communications, navigation and identification
- Electronic attack
- Sensor fusion
- Weapons deployment
A Block Development Approach
From the program’s outset, the software team has focused on developing six key software releases known as Blocks:
- Block 1A/1B – Block 1 comprises 78 percent of the more than 8.3 million source lines of code required for the F-35’s full warfighting capability. Block 1A was the ready for training configuration while Block 1B provided initial multi-level security.
- Block 2A – Block 2A is currently released to the F-35 fleet. It provides enhanced training including functionality for off-board fusion, initial data links, electronic attack and mission debrief. With Block 2A, nearly 86 percent of the required code for full warfighting capability is flying.
- Block 2B – Block 2B provides initial warfighting capabilities, including but not limited to expanded data links, multi-ship fusion and initial live weapons. The U.S. Marines declared IOC in July 2015 with Block 2B. With Block 2B, more than 87 percent of the required code for full warfighting capability is flying.
- Block 3i – Block 3i provides the same tactical capabilities as Block 2B. The principal difference between 2B and 3i is the implementation of new hardware, specifically the updated Integrated Core Processor. The Air Force declared IOC with Block 3i in August 2016. With Block 3i, 89 percent of code required for full warfighting capability is flying.
- Block 3F – Block 3F provides 100 percent of the software required for full warfighting capability, including but not limited to data link imagery, full weapons and embedded training
Pentagon and Lockheed Martin Finalize 2018 F-35 Sustainment Contract to Enhance Readiness and Reduce Costs
F-35 Lightning II: Details