Rolls-Royce Inks $1 Billion C-130J Super Hercules Deal With Lockheed Martin Corporation

Rolls-Royce and Lockheed Martin have signed a deal worth up to $1 billion, which will have Rolls-Royce be the official supplier of the engines for C-130J planes through 2025.

Feb 12, 2014 at 1:48PM

Today Rolls-Royce Corp. (NASDAQOTH:RYCEY) announced it has reached an agreement with Lockheed Martin (NYSE:LMT) to provide approximately 600 engines that will be used to power C-130J Super Hercules aircraft over the next decade. The agreement is worth up to $1 billion, according to Rolls-Royce.

"Lockheed Martin and Rolls-Royce have partnered for decades to produce thousands of the world's leading medium transport aircraft," said  Rolls-Royce executive Tom Bell in a statement. "Our new engine agreement secures that relationship for years to come, enabling operators to continue to enjoy the versatile, powerful and fuel efficient aircraft they have come to appreciate through 1 million flight hours and counting."

The new agreement will make AE 2100 by Rolls-Royce the engine of choice for every type of C-130J aircraft through 2025. In addition, the agreement will service contractual obligations both in the United States and internationally from 2014 to 2018. Lockheed Martin has delivered more than 300 of the four-engine transportation aircraft to customers in 16 countries.

"This agreement is a very important step in providing our customers the most affordable airlifter in the world," added  Lockheed Martin vice president and general manager of the C-130 programs, George Shultz, in the Rolls-Royce press release. "The C-130J Super Hercules has proven the 'value of the power' as the Rolls-Royce AE 2100 propulsion system allows the Super Hercules to perform any mission, anywhere, any time."

Rolls-Royce highlighted that it has delivered more than 1,500 of the C-130J engines, which are made in Indianapolis, to Lockheed Martin already through their previous agreements. The engine powers all of the C-130Js, which have logged more than 1 million flight hours.

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Patrick Morris has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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