For decades -- centuries -- "Brittania ruled the waves." But today, the Royal Navy is on the cusp of irrelevance.
Next year, its last operational aircraft carrier, the HMS Illustrious, is set to retire. (Its air wing has already departed). When that happens, the mighty British navy will be... aircraft carrier-less.
The queen is dead. Long live the queen!
And yet, Illustrious' retirement sets the stage for a new age in aircraft carriers for the Royal Navy. That same year, Britain aims to launch the lead vessel of a new class of carriers, the HMS Queen Elizabeth.
The new Queen will be a technological marvel, equipped with a new "highly mechanized weapon handling system" that can be operated, in a pinch, by as few as a dozen sailors. The entire vessel, twice the size of the carrier it is replacing, will boast a crew of only 679 souls -- just two dozen more than manned the Illustrious.
On combat operations, the Queen Elizabeth will carry as many as 40 aircraft. The ship's crowning glory will be its complement of as many as 36 of Lockheed Martin's (NYSE:LMT) new F-35B Lightning II fighter jets. A mix of Boeing (NYSE:BA) Chinook and AgustaWestland Merlin helicopters will likely accompany them, along with, potentially, tiltrotor Ospreys built by Boeing and Textron (NYSE:TXT).
But it's the F-35s that are key for Lockheed Martin. You see, the Queen Elizabeth remains several years from actual service. Even if it launches next year, sea trials aren't scheduled to begin before 2017, flight trials in 2018, and actual entry into service until 2020. But already, the United Kingdom is gearing up to make some pretty big buys of Lockheed Martin's uber-fighter to outfit its new flagship.
Bogeys on the horizon
So far, the U.K. has taken delivery of three F-35s from Lockheed. Last month, the U.K. Ministry of Defence ordered its fourth bird. The MoD is now in talks to purchase a flight of 14 more F-35s -- en route to fulfilling its commitment to buy a total of 48, minimum.
And that's only the start. When Britain signed up to help develop the new stealth fighter as part of a multinational "coalition of the paying," the MoD said it wanted up to 138 F-35s. These planes would then be split between the Royal Air Force and the Royal Navy. But in particular, Britain designed the Queen Elizabeth "from the ground-up" as a vehicle for delivering F-35s to their targets. So once the carrier is commissioned into service, it will account for a big chunk of the nation's F-35 force.
What's more, the U.K. is still considering whether to build a second carrier of the QE class -- the anticipated HMS Prince of Wales. If this gets built, Britain will have to exceed its current commitment to buy 48 F-35s. Indeed, with the aerial detachments on these two vessels accounting more than half of Britain's original planned purchase, the UK could wind up buying more planes than it originally anticipated -- rather than cutting its original order short.
At a per-plane cost exceeding $100 million, Lockheed Martin's F-35 stealth fighter is a plane that could bust many defense budgets. But the more countries that place orders for it -- and the more planes each country adds to its order -- the lower the plane's per-unit cost declines, encouraging still more orders from new buyers.
Right now, worst-case, Britain's commitments for F-35 purchases should add $4.8 billion to Lockheed's revenue stream. Once the Queen Elizabeth comes on line, that number could grow, and if the Prince of Wales follows the Queen to sea, it will mean even more money for Lockheed. Potentially, $13.8 billion -- or more.