Delivering some much-needed good news to Lockheed Martin Corp., the government of Israel agreed yesterday to buy 50 F-16 fighter planes in a package worth about $2.5 billion.
Israel chose the versatile jets over the more powerful and more expensive F-15, which is built by Boeing Co.
The deal had been expected for several months, but the announcement was delayed by the change of government in Israel caused by the election of Prime Minister Ehud Barak.
"This was another hard-fought competition that reaffirms the F-16 as the multi-role fighter of choice for the world's most discriminating air forces," said Dain Hancock, president of the Lockheed Martin Tactical Aircraft Systems plant in Fort Worth, Texas, where the planes are built.
Coupled with the announcement earlier this year that Greece will buy 58 F-16s, the Israel sale amounts to a "definite psychological boost" for the Bethesda aerospace giant, said defense industry analyst Paul Nisbet of JSA Research Inc. "It looks like the F-16 will be in production for many more years."
Lockheed Martin, which is expected to announce second-quarter earnings today, has suffered an unusual series of stumbles in the past year -- including failed Titan rocket launches, cost problems on the C-130J transport plane program and several warnings to investors of worse-than-expected financial performance.
Even with yesterday's announcement, Lockheed Martin stock closed down 12.5 cents at $38.75.
"Boy, the F-16 has been by far the brightest spot in the company," said Byron K. Callan, who follows Lockheed Martin for Merrill Lynch Global Securities. Callan was guarded, though, about whether the Israel sale could serve as a major confidence-builder for shareholders.
"The areas that probably need to have confidence inspired in them are really space and strategic missiles and Lockheed Martin Global Telecommunications, and the C-130J program.
"This is nice, but it's also something that really doesn't have that much fundamental impact on the company until you get out to 2002 or 2003," Callan said.
Of the $2.5 billion order, about $1.8 billion will eventually flow to Lockheed Martin, the company said. The sale includes mission equipment and a support package.
Israeli companies will handle about one-quarter of the work, including airframe components that will be manufactured by Israel Aircraft Industries.
The type of plane being sold is called the F-16I, and will include updated avionics, cockpit displays and electronic warfare systems.
The basic F-16 is proving to be one of the most popular warplanes in history. More than 3,900 have been delivered to air forces in 19 countries.
Boeing's F-15, by contrast, faces a potential production line shutdown in coming years if it cannot build a backlog of orders.