Global Economics

Lockheed Scores Big F-16 Contract

On Friday, another large deal was closed for Lockheed Martin Corp. (LMT). The defense manufacturer has secured a new $62 billion contract to provide F-16 fighters to two foreign countries.

The new F-16 order is for 90 jets total to be supplied over ten years to both Taiwan and Morocco. Morocco is set to receive 24 aircraft, and Taiwan will be getting 66 aircraft. This deal was briefly hinted at in June by Lockheed’s CEO, Ken Possenriede, during a call discussing Q2 earnings for 2020. The new F-16 contract is expected to be manufactured in Lockheed’s Texas and South Carolina facilities.

Currently, tensions are high between the U.S. and China; the new Lockheed deal with Taiwan could potentially strengthen tensions. In June, officials in China already expressed being upset about Lockheed Martin providing PAC-3 missile parts to Taiwan as part of a $620 million deal. At that time, Chinese officials stated that retaliatory sanctions would be put in place due to the sale being secured. The PAC-3 mission parts sold to Taiwan go towards expanding by 30 years the length of time that the country’s arsenal is expected to last.

Earlier in July, Lockheed made the news when it won two new Department of Defense (DOD) contracts worth nearly $16 billion combined. The deals were for developing and completing the C-130 transport aircraft for the U.S. Air Force and the building of new logistics and hardware systems for the U.S. Navy’s F-35 Lightning. There were also two other smaller DOD contracts worth $11 million and $1 million awarded to Lockheed at the time.

At market close on Friday, Lockheed Martin was up by 0.56% to $391.42.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Trader Buzz). I have no business relationship with any company whose stock is mentioned in this article.


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