By Pratyush Thakur and Mike Stone
(Reuters) – U.S. defense company Lockheed Martin raised its annual sales target for the first time this year on Tuesday, following the unexpected resumption of deliveries of its F-35 aircraft after Pentagon began accepting the jets last week.
The U.S. resumed taking F-35 deliveries after a months-long pause due to delays on its software upgrade. Lockheed has been upgrading the jets under Technology Refresh 3, or TR-3 program, that gives the F-35 better displays and processing power.
The delivery resumption includes incomplete software upgrade and Pentagon will withhold some payment, the details of which is unknown, until the remaining enhancements are finished.
Lockheed’s F-35 is the world’s largest defense program and contributes around 30% of the company’s revenue.
“The F-35 remains a top priority, and we recently delivered the first TR-3-configured aircraft to the customer and anticipate deliveries for 2024 to meet our expected range of 75-110 F-35s,” said CEO Jim Taiclet.
TR-3 involves both hardware and software improvements and is seen as a pillar of a wider upgrade to the stealth jet known as Block 4. The enhancements “are critical steps in ensuring the F-35 remains the most advanced fighter aircraft in the world and the key air vehicle node in the DoD’s joint all domain architecture”, Taiclet said.
Lockheed, however, does not expect the full tech refresh package to be ready for months.
It expects 2024 sales to be between $70.5 billion and $71.5 billion, compared with its previous forecast of $68.5 billion to $70 billion.
The company also benefited from a $95-billion additional funding, which includes aid for Ukraine and Israel, approved by Congress.
Combat in Ukraine and Israel has consumed high volumes of munitions, including Lockheed-made Patriot air defense interceptors, used to shoot down incoming hostile missiles.
Lockheed posted net income of $6.85 per share for the second quarter, compared with $6.63 per share a year earlier.
Total quarterly sales rose 8.5% to $18.12 billion.
(Reporting by Pratyush Thakur in Bengaluru; Editing by Shilpi Majumdar)