The New $55 Billion Stealth Bomber Faces a Dangerous Future

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Long-range bombers such as the B-52, B-1, and B-2 are iconic Air Force symbols, and they provide the Air force with a capability that no other nation has -- the ability to rapidly deploy tailored effects anywhere in the world.They're also old. In fact, the B-52s have been flying since the 1960s, the B-1 since the 1980s, and the B-2s since the 1990s. Understandably, their technology is slightly outdated, and they're facing age-related issues.

That's why the Air Force has stepped up plans to acquire a next-generation stealth bomber. But Oct. 1 marks the beginning of the fiscal 2014 defense budget and, with it, the grim reality that sequestration is still in affect. In fact, thanks to budget cuts, for the first time in American aviation history, there are no new manned military aircraft in the development phase. That directly affects the Air Force's efforts to acquire a new bomber. It also affects Boeing (NYSE: BA  ) , Lockheed Martin (NYSE: LMT  ) and Northrop Grumman (NYSE: NOC  ) . Here's what you need to know.

A U.S. Air Force B-2 Spirit bomber. Source: Wikimedia Commons.

Stealth bombers vs. sequestration
The Air Force has been trying for years to acquire 100 Long-Range Strike-Bombers, or LRSBs, at a per-unit price of approximately $550 million. So far, however, it's been unable to lock-down a contract, in large part because of cost-related issues.

The inability to secure a new bomber isn't ideal in terms of overall national defense, but with conflicts mainly centered in Iraq and Afghanistan, the need for a stealth bomber hasn't been as pressing. But things are changing as new threats emerge in Asia. Just last week, for example, the Air Force deployed B-52s to Guam in an effort to "demonstrate the United States' continued commitment to stability and security in the Asia-Pacific region," according to the Air Force. 

The increased need for a next-gen bomber is great news for Boeing, Lockheed, and Northrop, as all three have stated their intention to compete for the lucrative contract -- although the exact details have been a closely guarded secret. However, because of spending cuts, the need for a new bomber may go unmet -- possibly permanently.

As Breaking Defense put it, "Underinvestment in procurement and research and development will inevitably lead to a loss of capability in the defense industrial base as companies shift resources into more stable and profitable business lines." 

What to watch

Photo: United States Air Force, via Wikimedia Commons. 

The Air Force has requested $400 million for LRSB acquisition strategy in FY2014. If it's approved, that will be great news for Boeing, Lockheed, and Northrop, as a bomber contract promises to be incredibly profitable. If it's not, it could affect Air Force readiness. Right now the Air Force bomber fleet consists of 76 B-52s, 61 B-1s, and 20 B-2s. The B-2s, often called the Bat Wing or Flying Wing, are the newest, but are also the most costly at $3 billion per unit and a cost of $135,000 per flight hour. In fact, it's the grandpa of the group, the B-52s, that the Air Force mainly relies on.

But the B-52s can keep flying forever, and the Air Force knows it. That's why it wants new bombers by 2020. Will the Air Force get this need met? Only time will tell, but as this story develops, I'll be sure to bring you updates.

Boeing built the first B-52 bomber, and it could win the Air Force's new bomber contract. But even if it doesn't, it has a lot going for it. But is it the right defense stock for you? A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," outlines three companies, including Boeing, that could take off when the global economy gains steam. Click here to read the free full report!

Read/Post Comments (12) | Recommend This Article (16)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 31, 2013, at 12:07 PM, cdkeli wrote:

    Surely what a $55 billion stealth bomber needs most is a stealthy defense industry and labotomized congress to pass this bill under the noses of the clueless American public,,,oh wait, we already do!!!

  • Report this Comment On August 31, 2013, at 12:17 PM, centurian15 wrote:

    I have worked for the air force as an officer and a civilian engineer. I do not see how we can keep avoiding these new aircraft with the money not available! We have been thru sequester, if we keep having to sequester the workforce, no one will be availab le to develop this bomber and the bomber will keep getting more expensive as we stretch out the development because of no money to pay engineers to develop it!! We can upgrade our current force which is less costly!!

  • Report this Comment On August 31, 2013, at 1:36 PM, peterwolf wrote:

    Unbelievable. We're flying planes older than the pilots. In fact some of the planes are as old as the pilots' parents !! B-52's are sitting ducks for modern air defense systems. I pity the crews that would have to fly those things into harms way.

    But last I checked, the welfare and food stamp budgets are exempt from the sequester.

  • Report this Comment On August 31, 2013, at 3:55 PM, NoFoolHere123 wrote:

    >>>as a bomber contract promises to be incredibly profitable

    This said it all. They want to keep feeding the contractors, lobbyists, friends, political contributors, etc....

    Look at what is going on with the F35 programs

    It is getting out of control.

  • Report this Comment On August 31, 2013, at 4:29 PM, Steveinpodunk wrote:

    Absolutely, this is what are nation needs; an incomprehensibly expensive weapons system to succeed the previous incomprehensibly expensive weapons we already have that we never actually needed to be used to defend us against a threat that never really existed. Certainly, the Russkies and Chinese are building comparable weapons with their nations' treasure. What's that? they're not, well, build them anyway!

  • Report this Comment On August 31, 2013, at 4:33 PM, Steveinpodunk wrote:


  • Report this Comment On August 31, 2013, at 4:42 PM, SeniorMoment wrote:

    Surely cruise missiles will do the job instead.

  • Report this Comment On August 31, 2013, at 6:36 PM, mrpickem wrote:

    Cutting defense today, is like cutting your life insurance,and your car insurance. The imediate payoff is great, but sooner or later, you're going to be ver, very sorry.

    i'm only 10 and know this.

  • Report this Comment On September 01, 2013, at 12:47 AM, rotorhead1871 wrote:

    the USAF will be lucky to get a new bomber by 2030!!..and it will probably be unmanned...

  • Report this Comment On September 01, 2013, at 3:43 AM, vincelee76 wrote:

    Why so expensive?? 55 billion. That is waaaaaay toooo much. So stupid. All you have to is put tomohawk cruise missles in Guam, Japan. That will take out any communist countries's agressions. What we need are stealth missles at CHEAPER prices. Guam and Japan are really close to commie countries, it is enough for them to think twice about any agressions.

  • Report this Comment On September 01, 2013, at 8:09 AM, sammwise wrote:

    Wall Street and the American government 'created' the 'threat' in Asia just so they could justify waste like this bomber.

  • Report this Comment On September 01, 2013, at 9:15 AM, lilyvonshtupp wrote:

    Maybe barry could get a loan from Al queda.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2618239, ~/Articles/ArticleHandler.aspx, 9/26/2016 6:43:24 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,094.83 -166.62 -0.91%
S&P 500 2,146.10 -18.59 -0.86%
NASD 5,257.49 -48.26 -0.91%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 4:01 PM
BA $130.57 Down -1.21 -0.92%
Boeing CAPS Rating: ****
LMT $245.53 Down -0.31 -0.13%
Lockheed Martin CAPS Rating: ****
NOC $217.00 Down -0.05 -0.02%
Northrop Grumman CAPS Rating: ****