雅虎香港財經 RTX Secures a $381M Contract to Support F135 Engine Program
RTX Corp.’s RTX business unit, Pratt and Whitney, recently secured a modification contract involving the F135 propulsion system. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.
Details of the Deal
Valued at $380.6 million, the contract is expected to be completed by August 2024. The latest modification enables RTX to provide F135 propulsion system annual sustainment. These sustainment efforts include program management, financial and administrative activities, propulsion integration, replenishment spare part buys, engineering support, material management, configuration management, product management support, software sustainment, security management, Joint Technical Data updates and support equipment management.
Per the terms of the deal, RTX will also offer depot-level maintenance and repair for all fielded propulsion systems at the production sites and operational locations of the F-35 fighter jets.
The contract will serve the U.S. Air Force, Marine Corps, Navy, non-U.S. Department of Defense participants, and Foreign Military Sales (FMS) customers. A major portion of the work related to this deal will be executed in Hartford, CT.
What’s Favoring RTX?
Amid the geopolitical tensions prevalent across the globe, nations are rapidly augmenting defense purchases to strengthen their warfare capabilities. This has led to an increased demand for fighter jets, which form an integral part of a country’s defense products.
In this context, it is imperative to mention that F-35 jets, built by America’s largest defense contractor, Lockheed Martin LMT, enjoy a lucrative position in the combat aircraft arena. RTX, as the manufacturer of the F-35 jets’ engine, F135, witnesses a steady flow of orders from the U.S. Army, along with a handful of international partner countries as well as FMS customers. The latest contract win is a bright example of that.
The soaring demand for Lockheed’s F-35 aircraft can be gauged from the fact that the Czech Republic became the 18th nation to join the F-35 global team during the first quarter of 2024, making its intent to procure 24 F-35s quite obvious. In addition, the U.S. State Department approved a potential foreign military sale to Greece for up to 40 F-35 jets. Moreover, Singapore announced its intent to purchase eight F-35A jets.
Looking ahead, the production of F-35 jets is expected to continue for several years, given the U.S. government's current inventory target of 2,456 aircraft for the Air Force, Marine Corps and Navy.
Consequently, we may expect Pratt & Whitney, which builds F-135, to witness more order inflows for the F-35 engine and its propulsion system in the coming days, like the latest one. This should significantly bolster RTX’s top line.
Peer Growth
Apart from Lockheed and RTX, defense majors that stand to benefit from the expanding production rates of F-35 have been discussed below.
Northrop Grumman NOC: The company renders its expertise in carrier aircraft and low-observable stealth technology for the F-35 program. Northrop Grumman is part of the international partnership involved in building three variants of the F-35 jet.
It is engaged in the design and production of the AN/ASQ-242 Communications, Navigation and Identification avionics suite, which can be dynamically programmed to arm the F-35 pilot with multiple-mission capabilities, engineered for seamless transition from one mission phase to the next.
BAE Systems BAESY: This defense major’s short takeoff and vertical landing experience, along with air systems sustainment, supports F-35’s combat capabilities. The company provides an electronic warfare suite for F-35 that includes fully integrated radar warning (targeting support and self-protection) to detect and defeat surface and airborne threats.
In 2023, BAE Systems celebrated the delivery of its 1000th rear fuselage to Lockheed from its facilities in the North West of the United Kingdom. In the United States, BAE Systems’ test pilots and engineers are working to get the aircraft ready to meet the needs of its customers.
Price Performance
In the past year, shares of RTX have rallied 13.5% against the industry’s 7.5% decline.
Image Source: Zacks Investment Research
Zacks Rank
RTX currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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