Please ensure Javascript is enabled for purposes of website accessibility

USAF Rolls Over. Will Lockheed Play Dead?

By Rich Smith – Updated Apr 6, 2017 at 2:25AM

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

F-22's final dogfight will play out in Congress.

Strike one. Strike two. For Lockheed Martin's (NYSE:LMT) hi-tech wonder-plane, it's all over but the shouting.

Defense Secretary Gates wielded the budget axe against Lockheed's Raptor fighter jets last week, putting the final kibosh on production of the best air-superiority aircraft in the world. Yesterday, the United States Air Force signed its own John Hancock on the F-22's death certificate. Acceding to the Secretary's position, the Air Force agreed that it can get by with just the 187 aircraft now authorized, and make do with the new F-35 Lightning II fighters (also by Lockheed) for future military needs.

But now begins the real fight: Congress.

The Raptor may be Lockheed's plane, you see -- but it's not just Lockheed's plane. Boeing (NYSE:BA), Northrop Grumman (NYSE:NOC), and United Technologies (NYSE:UTX) all serve as major subcontractors to the F-22's manufacture.

General Dynamics (NYSE:GD) plays a small role as well, and L-3 Communications (NYSE:LLL) contributes part of the plane's electronics. And even more important than the names of the key players are their locations. 44 of the nation's 50 states produce F-22 plane parts, meaning that literally hundreds of members of Congress have a stake in keeping this program alive.

The Raptor must die
As a taxpayer, though, I hope that Congress will eschew pork-barrel economics this time around and let the Raptor die in peace. In light of the Air Force's decision, Lockheed itself is reportedly reconsidering its lobbying effort in support of the plane, as well it should. After all, Lockheed doesn't need the F-22 for its survival. Far from it.

Since it was first dreamed up in the '80s at a planned fleet size of 750 units, the F-22 program has steadily shrunk. Right now, the debate seems to be between continuing to build out to 243 aircraft (one third the number originally envisioned) or standing pat at 187 (one quarter). By now, Lockheed must realize that it's fighting a losing battle.

In contrast, Lockheed's F-35 program seems to swell by the day. The most conservative estimate I've seen lately calls for as many as 3,100 F-35 variants to be built for the U.S. and its partner nations over the next 60 years -- $1 trillion in revenue for Lockheed. Other estimates, including sales to allied states who did not participate in the plane's development, suggest that a far higher number of F-35s will eventually be sold.

My advice: Let the F-22 rest in peace, Lockheed. You already captured Lightning in a bottle with the F-35. Quit while you're ahead.

Let Foolishness be your best defense:

Fool contributor Rich Smith owns shares of Boeing and Force Protection. The Motley Fool has a disclosure policy.

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

Lockheed Martin Corporation Stock Quote
Lockheed Martin Corporation
LMT
$386.29 (-0.90%) $-3.50
The Boeing Company Stock Quote
The Boeing Company
BA
$121.08 (-3.39%) $-4.25
Raytheon Technologies Corporation Stock Quote
Raytheon Technologies Corporation
RTX
$81.86 (-0.58%) $0.48
L3 Technologies, Inc. Stock Quote
L3 Technologies, Inc.
LLL
General Dynamics Corporation Stock Quote
General Dynamics Corporation
GD
$212.17 (-1.05%) $-2.26
Northrop Grumman Corporation Stock Quote
Northrop Grumman Corporation
NOC
$470.32 (-0.03%) $0.16

*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
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/03/2022.

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.