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Raytheon's Wandering Blimp Will Fly Again

By Rich Smith - Feb 29, 2016 at 10:13AM

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Getting JLENS to work right could mean a near-$1 billion payday for Raytheon.

They're ba-ack!

Image source: RAYTHEON.

Four months ago, Raytheon (RTN) lost control over its $2.8 billion flying spy blimp -- the "JLENS" anti-missile aerostat -- when JLENS broke loose from its tether over Aberdeen Proving Grounds. Over the ensuing several hours, JLENS wandered the Eastern Seaboard, floating 160 miles  (before finally being brought down in Pennsylvania through a combination of natural deflation and shotgun pellets), dragging a mile-and-a-quarter-long cable behind it, and causing an estimated $2 million in property damage as that cable caught on and brought down power lines along its route.

Four months later, Raytheon is ready to give the blimp a second chance.

Once more, with feeling
As reported earlier this month on, the U.S. Army and North American Aerospace Defense Command have at long last wrapped up their investigation into what happened to JLENS (short for the Joint Land attack cruise missile defense Elevated Netted Sensor system). They concluded that "a combination of design, human error and procedural issues" all played a part in JLENS escaping its tether last October.

Without going into too much detail, problems with JLENS's sensors caused a cascading series of malfunctions that all added up to JLENS being allowed to put too much pressure on its tether, snapping the inchwide cable that held the fire-control aerostat in place. The good news for JLENS -- and for Raytheon, and for its shareholders -- is that NORAD thinks these problems are fixable. What's more, NORAD considers JLENS a "unique cruise-missile defense capability" that "it is in the best interest of the nation to continue."

And so, with the Obama Administration requesting $45.5 million in funding for the project in its fiscal 2017 budget request, JLENS will get another chance to prove itself to be both effective -- and safe.

What it means to Raytheon -- and to taxpayers
If that sounds like a risky move, it may still be worth it. Taxpayers have already sunk nearly $3 billion into JLENS, and if that investment can be salvaged, it really will provide the U.S. with a unique capability.

The twin aerostats that make up a JLENS "orbit" use the same cables that (theoretically) hold them in place to transmit data from their radars through fiber optics, informing ground controllers of possible threats detected from their mile-up perch at light-speed. The detection capability is persistent, with aerostats able to remain aloft for 30 days at a time. And it's cheap. According to Raytheon, each two-aerostat orbit, provides the equivalent detection ability of an AWACS aerial early warning aircraft -- but at less than one-fifth the cost of an AWACS.

 It would be a shame to have to give that all up just because had one (admittedly very) bad day back in October. What's more, if the JLENS concept can be proven successful, there's every possibility it will bring more business to Raytheon. Initial plans for the project called for the construction and deployment of as many as 16 JLENS orbits, or 32 blimps, around the country if JLENS could be proven effective. At an estimated annual budget of $55 million or thereabouts, that works out to about $880 million in recurring revenue for Raytheon. Even for a company that does $23 billion in annual business, that's a significant sum.

The upshot: JLENS's revival is good news for Raytheon. All they have to do now, is make sure they do it right this time.

Fool contributor Rich Smith owns shares of Raytheon. You can find him on Motley Fool CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 260 out of more than 75,000 rated members.

The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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