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.
-- Adam Weinstein, Mother Jones, January 2012
Liberal-leaning Mother Jones may be the last magazine you'd expect to sing the praises of the A-10 Thunderbolt Warthog, the hands-down best "tank buster" aircraft in the American military. But three years ago, praise it they did -- about the same time the U.S. Air Force itself was trying to kill the plane and repurpose funds allocated to maintaining and upgrading the A-10 to buying new F-35 stealth fighter jets from Lockheed Martin (NYSE:LMT) instead.
Every year since, the Pentagon has made an all-out effort to retire the A-10, only to be thwarted by the aircraft's defenders in Congress. Now, however, the Air Force may have finally come up with a plan to kill the Warthog that will work.
I know, I know. The A-10 Thunderbolt Warthog is the foot soldier's fighter jet, a close-air support wunderkind. To some, speaking ill of the Warthog verges on heresy -- and in fact, I don't intend to speak ill of it at all.
But the fact remains that after nearly 40 years in active service, the A-10 is starting to show its age. With the aircraft no longer in production, the Pentagon has had to hire secondary contractors such as Northrop Grumman (NYSE:NOC) and Boeing to keep the Warthog flying, and to replace wings on dozens of the aircraft. Pilots who fly it complain that the Warthog's General Electric TF34-GE-100A engines lack power, preventing the plane from, for example, taking off with a full weapons load when operating out of high-altitude airfields.
And of course, there's the perennial complaint from the Air Force itself: That the A-10 is fine for shooting up low-tech terrorists, but it lacks the kinds of sophisticated self-defense mechanisms that would keep it alive in a "contested environment" against a first-world adversary.
Introducing Warthog 2.0?
So, what's the solution? Last week, U.S. Air Combat Command commander Gen. Hawk Carlisle suggested the Air Force is at least "thinking about" fielding a successor to the A-10. According to the general, development of an entirely new, dedicated CAS (close air support) aircraft "has to be in the discussion."
The general didn't go into specifics, but we can at least speculate about where he's going with this: As Gen. Carlisle pointed out, the debate over a future dedicated-CAS aircraft is still "wrapped around the A-10." So, that's the design that would form the basis of any new CAS aircraft the Air Force decides to build. But working from that starting point, there's still plenty of room for improvement.
Last year, in a column published on Medium.com, A-10 aerospace engineer Pierre Sprey averred that "there is a lot that can be made better than the A-10" with today's technology, to improve both the aircraft's performance and its survivability. In fact, according to Sprey, "almost every aspect of the A-10 can be vastly improved using modern materials and construction techniques," Medium.com says
Quizzing A-10 pilots on what they'd like to see in an A-10 replacement, the Medium.com column suggested that "the Warthog's current capabilities" -- a heavy weapons load, long loiter time, and ability to fly slow and turn tight, are sine qua nons for any future dedicated CAS aircraft. From there, a future Warthog 2.0 could also benefit from the addition of:
- More powerful engines.
- A faster cruising speed (a 20% improvement to 360 knots would be desirable).
- Improved electronics -- including better cockpit displays, 360-degree infrared sensors, and Northrop Grumman's own fourth-generation LITENING targeting pod.
- Advanced missile warning sensors, and missile jamming electronic warfare equipment, to boot
Incorporation of these improvements to the basic A-10 design would address Air Force objections that the A-10 is "not survivable" -- while at the same time enhancing the A-10 Thunderbolt Warthog's lethality as a CAS platform.
What it means for investors
At first glance, this all sounds very positive for Northrop Grumman, which, in 1987, acquired "all A-10 assets" from the plane's original manufacturer. Northrop would probably be tapped to build any successor that's, in the general's words, "wrapped around the A-10." And that sounds like good news for shareholders of Northrop Grumman.
One key caveat, though, is that pilots say the aircraft should ideally cost "less than $20 million." Hitting that mark could prove tricky. According to data from deagel.com, the original A-10 cost $9 million per unit to build -- but that was decades ago. I asked Northrop Grumman for a best guess at what the plane would cost to build new in present-day, but Northrop declined to "speculate on the price of a new A-10."
What we do know is that most aircraft that perform similar CAS missions for the Army and Air Force today -- Apache attack helicopters for the former, F-16 and F-15 fighter jets for the latter -- cost anywhere from 70% more, to twice the targeted $20 million sticker price. AC-130 gunships from Lockheed Martin cost four times as much.
What that works out to, then, is a minimum cost of $6 billion (at $20 million a pop) to replace today's fleet of A-10 Thunderbolt Warthogs with 300 new Warthog 2.0s. And realistically, that price could double to $12 billion or more if the wishlist for outfitting a new CAS platform grows too long. Again, this sounds like good news for Northrop -- a potential prize worth 25% to 50% of its $24 billion in annual revenue (according to S&P Capital IQ).
But when you consider how hard the Air Force has fought to save a piddling $300 million in annual operating costs from the A-10 program, all in the interests of using that money to buy an extra two or three F-35s a year, you have to wonder how they'd react to the idea of an A-10 replacement costing billions and billions of new dollars.
Personally, I'd expect the Air Force brass to buck at that price. And this tells me that despite what he's saying, Gen. Carlisle probably isn't serious about advocating for an A-10 replacement after all. Seems to me, this is just the Air Force coming up with a novel twist, and a new way...
Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 293 out of more than 75,000 rated members.
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