Which of America's military aircraft are the most expensive? Opinions vary.
Turn to Google for the answer, and you'll find multiple "top 10" lists. Most of these key off an old Time magazine report that ranked such aircraft as Northrop Grumman's (NYSE:NOC) B-2 Spirit stealth bomber and Lockheed Martin's (NYSE:LMT) F-22 Raptor stealth fighter as among America's priciest planes -- which is sort of true. With sticker prices of $2 billion for each B-2 and $412 million for the F-22, Spirit and Raptor were among the priciest planes America produced. But that's no longer the case.
The fact is, America hasn't built a single new F-22 fighter in more than five years, while the last B-2 bomber rolled off the production line in 2000. While these planes remain expensive, they're no longer in production. Meanwhile, the new B-21 stealth bomber, which will also be built by Northrop, at an estimated cost of $550 million per plane, has not yet begun production. But what are the priciest planes being built right now, soaking up taxpayer dollars today?
Here's a quick list, as of 2016, of the seven priciest military planes (still) made in the USA.
1. Boeing C-17 Globemaster III
First developed in the 1980s, these gigantic transports are still made; Boeing (NYSE:BA) delivered four last year. Citing Pentagon budgetary documents, the military aerospace specialists at AeroWeb give $225 million as the "flyaway cost" for a C-17 -- but that may be a bargain. Just a few years ago, Congress gave Boeing permission to sell a single C-17 to Kuwait ... for $371 million.
2. Boeing P-8A Poseidon
The successor to Lockheed Martin's (NYSE:LMT) P-3 Orion, Boeing's P-8A is how the U.S. Navy intends to fix and kill hostile submarines in the 21st century. You can fly away this jet-powered sub-hunter for a mere $171.6 million, according to AeroWeb. Add on required training and support services, though, and the price can zoom past $355 million per plane.
3. Northrop Grumman E-2D Advanced Hawkeye
Nicknamed the "mini-AWACS," Northrop Grumman's latest version of its venerable E-2D Hawkeye (first flown in 1960) plays quarterback in naval aviation dogfights, spotting good guys and bad guys, and guiding the former to destroy the latter. AeroWeb assigns E-2D a flyaway cost of $173.6 million each, which is why it may be better to buy them in bulk. A few years ago, Northrop won a contract to sell 25 of them to Japan for $3.64 billion total -- $145.6 million apiece.
4. Lockheed Martin F-35B Short Take-Off and Vertical Landing (STOVL) variant
At an estimated program cost of $1.5 trillion over a 60-year time frame, Lockheed Martin's F-35 Lightning II Joint Strike Fighter is widely believed to be the most expensive defense program in U.S. history. But per plane, the F-35 is only the fourth-priciest military airplane currently under construction in the USA.
It's also the fifth-priciest military airplane, and the sixth as well.
The F-35 actually comes in three variants: a conventional aircraft for the Air Force (F-35A), a "jump jet" variant for the Marine Corps (F-35B), and a third type, designed for carrier takeoffs and landings with the Navy (F-35C). The F-35B is the most expensive of these options, with Lockheed Martin recently announcing a deal to produce F-35Bs for the Marines and for U.S. allies at $122.8 million per plane.
5. Lockheed Martin F-35C Carrier Variant (CV)
The Navy's carrier-variant F-35C is the second most expensive F-35 model, now priced at $121.8 million in Lockheed's tenth "lot" of production.
6. Lockheed Martin F-35A Conventional Takeoff and Landing (CTOL) variant
"And the first shall be last." Lockheed's F-35A variant -- the most numerous type of F-35 that will be produced for both U.S. and foreign buyers -- costs "only" $94.6 million.
7. Boeing EA-18G Growler
Rounding out our list of the seven priciest military planes made in the USA is Boeing's specialized electronic-warfare bird, the EA-18G Growler. Based on the cheaper ($67 million) F/A-18 design, Boeing's Growler carries specialized electronics that drive up the per-plane cost to $80.4 million, according to AeroWeb data.
Lockheed's F-35: So nice, they named it thrice
Now you may have noticed that Lockheed Martin's F-35 occupied not one, but three slots on the above list. There's a reason for that.
When first envisioned, the three versions of Lockheed's F-35 were supposed to resemble one another so closely as to be essentially the same plane. They were even supposed to use the same parts for "70% to 90%" of their construction. That's not how things turned out.
For reasons too technical to go into here, the A, B, and C variants of the F-35 diverged over the course of their development. They've become so different that, according to F-35 program executive officer Air Force Lt. Gen. Christopher Bogdan, the three variants now share not 90%, but just 20%, "commonality." Although they're cosmetically similar, today it's more accurate to consider the F-35A, the F-35B, and F-35C as separate planes, rather than variations on a single theme.
What it means to investors
Those are three separate very expensive planes. And you might think that's good news for Lockheed Martin. After all, expensive airplanes should be good for profit margins, right?
Well, maybe -- but here's the problem. The prices noted above are what Lockheed has negotiated to deliver the F-35 to its customers in Low-Rate Initial Production Lot 10 -- its latest batch of F-35s. Averaged out, a generic F-35 now fetches barely $113 million in revenue for Lockheed. And yes, that's a lot, but it's 7.3% less revenue than Lockheed got for its "Lot 9" F-35s, which sold for an average of $122 million per plane.
Now consider that -- in part because the F-35's three models make it so complex to build -- Lockheed Martin was, at last report, earning only about a 7.0% operating profit margin on the F-35 (according to Lockheed Martin consultant Loren Thompson). You can see how cutting the price on the plane by more than its own profit margin might be a problem for Lockheed. Even if deliveries accelerate, expanding production efficiencies, continual price cuts such as President Donald Trump has demanded from Lockheed threaten the company's ability to grow margins on the F-35 by 1% this year, as Lockheed promised to do.
As it turns out, Lockheed might have been better off having just one insanely expensive F-35 on this list, instead of three.