Lockheed Martin Corporation (LMT) has added another feather to its cap with the Czech Republic government recently issuing a Letter of Offer and Acceptance for the 5th Generation F-35 Lightning II aircraft, bolstering LMT’s international revenues for the upcoming years.
Czech Republic’s F-35 Adoption
The Czech Republic government has set its sights on procuring 24 F-35 Lightning II jets and is scheduled to receive the first aircraft in the year 2031, accompanied by comprehensive support service from LMT including personnel training, service and logistical support.
Significance of F-35
The F-35, hailed as the most lethal, survivable, and connected fighter jet globally, has operated from 32 bases worldwide and has successfully amassed nearly 773,000 cumulative flight hours. Lockheed Martin has achieved remarkable milestones in this regard, having delivered over 990 F-35s and trained more than 2,280 pilots and 15,400 maintainers by January 2024. With the F-35 program remaining its largest revenue generator, accounting for 64% of the segment’s net sales in 2023, LMT anticipates delivering 147-153 jets in 2024 and 156 jets in 2025 and beyond, a significant source of revenue going forward.
Lockheed’s Dominance in Europe
Given the current geopolitical landscape and the push for military readiness, European nations are showing an increasing penchant for replacing their aging fighter aircraft. This demand surge is expected to drive the European fighter aircraft market to a compound annual growth rate of more than 4% during the 2024-2029 period according to the Mordor Intelligence firm. Lockheed Martin is well positioned to capitalize on this demand, with its robust portfolio, including the F-35 jets, C-130 Super Hercules, and the F-16 Fighting Falcon jet. The company’s recent successful deliveries of F-16 Block 70 jets for Slovakia and Belgium’s first F-35A Lightning II are testaments to its growing influence in the region.
Peer Prospects
Other companies that stand to benefit from the expansion in the European fighter aircraft market include Airbus SE (EADSY), BAE Systems PLC (BAESY) and Northrop Grumman Inc. (NOC). Each of these firms has a strong foothold and continued relevance in the European defense landscape, with offerings in line with the growing need for advanced military capabilities in the region.
Price Performance
In the past year, shares of LMT have shown resilience, having lost only 7.1% compared with the industry’s 9.9% decline, indicating its strong position and outlook.
Final Thoughts
Lockheed Martin continues to solidify its presence globally, and the recent F-35 deal with the Czech Republic is a testament to the company’s advancement. Its foothold in Europe, coupled with a strong demand for its military aircraft, stands as a strategic advantage amidst a rapidly changing geopolitical landscape. As the company’s F-35 program gains further traction and international markets expand, Lockheed Martin remains poised to capitalize on the burgeoning demand for advanced military capabilities, ensuring continued growth and opportunities for investors.
