Please ensure Javascript is enabled for purposes of website accessibility

Pentagon Wants a New A-10 Warthog, but Defense Contractors Say "Pass"

By Rich Smith - Apr 14, 2017 at 10:13AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It seems some multibillion-dollar opportunities are just less opportune than others.

"Imagine an unstoppable commercial Learjet with a full-automatic cannon in its nose and an iron bathtub surrounding the cockpit. That gives you some idea of the A-10's appearance and performance."

That's how Mother Jones describes the U.S. Air Force's A-10 Thunderbolt II, a 1970s-vintage close air support (CAS) fighter lovingly referred to as the "Warthog" for its homely appearance. Ugly the A-10 may be, but experts aver that the Warthog is also "the best CAS platform mankind has ever designed."

And yet, as this aircraft enters its fifth decade of service, the Air Force worries that the A-10 Warthog is getting a bit long in the tooth. Multiple rounds of upgrades by "prime" contractors Lockheed Martin (LMT 2.56%) and Northrop Grumman (NOC 3.77%), and even brand-new wing-sets manufactured by Boeing (BA -1.01%), can keep the Warthog flying for years to come. But no plane can fly forever.

Eventually, the Air Force will need to replace the Warthog -- perhaps with Lockheed Martin's own F-35 stealth fighter (as the Air Force has repeatedly tried to do), or perhaps with something else. Foreseeing this day, about a year ago, the Air Force announced a plan to begin vetting potential replacements for the A-10's ground support mission -- specifically, a light attack fighter yet-to-be-named but temporarily dubbed the "OA-X."

A-10 Thunderbolt II muzzle, with bared teeth painted on it.

This A-10 Warthog seems to take umbrage at the idea that any other plane could replace it. Image source: Getty Images.

What is OA-X?

The Air Force wants to buy 300 light attack OA-X fighter planes -- this is known. What is not known (yet) is precisely what plane OA-X refers to, or will be.

Reportedly, the guiding principle of picking an OA-X will be cost, both cost to acquire (the Air Force would really like to buy an off-the-shelf, already-existing warbird rather than develop something all new) and cost to operate. In the latter regard, the Air Force would probably prefer a fuel-sipping turboprop design over a jet-powered aircraft -- although the latter would surely be more survivable. Weapons-wise, OA-X should be armable to the teeth, capable of carrying everything from smart bombs to air-to-air missiles, ground attack rockets, and .50-cal machine guns.

Who will win the OA-X contract?

As one half of the "Prime Team" responsible for keeping the Warthog flying (and the inheritor of all of the A-10's technical data, after original manufacturer Fairchild-Republic went defunct), Northrop is probably best-positioned to know what kind of low-cost aircraft can best replace the A-10's mission. There's a question, though, as to whether Northrop Grumman will compete on this contract at all.

Right now, Northrop arguably has its hands full trying to win the Air Force's much bigger "T-X" trainer jet contract, which, with a potential value of $50 billion, is a much more valuable prize than OA-X. Compared to that, the value of winning the OA-X contract (perhaps $4.5 billion for 300 aircraft priced at $15 million a pop, for example) might not hold much interest. Indeed, already, two of Northrop's rivals on T-X -- Boeing and Lockheed Martin -- have indicated they will pass on OA-X, perhaps to better focus their efforts on winning the trainer contract away from Northrop.

That leaves second-tier aerospace builder Textron (TXT 1.16%) as the potential front-runner for winning OA-X. For years, Textron has been trying to interest the Air Force (or anyone else, really) in buying its internally developed Scorpion fighter jet for light attack missions. Textron also builds the AT-6 Wolverine, a prop-driven light attack bird once mooted for consideration as a light attack plane for the Afghan air force. 

With two ready-built aircraft to offer the U.S. Air Force for its light attack needs, Textron already has a head start in competing for OA-X. And with annual revenue of only $4.9 billion from its aviation division, the company might have more than ordinary interest in winning a $4.5 billion OA-X contract -- and the extra years' revenues that come with it. Both of these factors suggest Textron will pursue this contract doggedly. If Northrop does want to win this one, though, it had better get a move on.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Textron Inc. Stock Quote
Textron Inc.
$60.26 (1.16%) $0.69
Northrop Grumman Corporation Stock Quote
Northrop Grumman Corporation
$481.87 (3.77%) $17.51
The Boeing Company Stock Quote
The Boeing Company
$136.31 (-1.01%) $-1.39
Lockheed Martin Corporation Stock Quote
Lockheed Martin Corporation
$425.89 (2.56%) $10.64

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.