Northrop Gets B-2 Maintenance Contract from U.S. Air Force

Northrop Grumman Corporation NOC has entered into a maintenance contract with the U.S. Air Force for the latter's fleet of B-2 stealth bombers. The current contract is essentially a modification of an earlier contract signed in April.

Per the modification, Northrop Grumman will restore each B-2 from end-to-end under a process called programmed depot maintenance ("PDM"). Instead of the current seven-year cycle, the PDM process will take place every nine years.

This move will help the Air Force save maintenance costs to the tune of $900 million over the life of the fleet and make one more jet available for combat at any given time. The new plan will also reduce the average length of a B-2 maintenance outage from 400 days to 365 days.

The PDM cycle enhances the jet's promptness to conduct global security missions and is a vital attempt by the parties involved to increase bomber availability. At present, the refurbishment process is carried out at the company's Aircraft Integration Center of Excellence in Palmdale.

The B-2 bomber can fly 6,000 nautical miles without re-fueling and over 10,000 nautical miles with just one aerial refueling. This enables the B-2 to reach anywhere in the world within hours. The B-2 can carry more than 20 tons of conventional and nuclear ordnance and deliver it accurately under all weather conditions.

Northrop continues to invest heavily in research and development to boost its order flow. The company expects international sales to increase by about 15% in 2015 as it continues to witness strong demand for its products on a global scale with programs like F-35 and E-2D, Triton, and SABR radar, as well as a robust set of new programs.

Zacks Rank

Northrop Grumman currently carries Zacks Rank #2 (Buy). Some other stocks in the aerospace and defense space worth considering are Leidos Holdings, Inc. LDOS and LMI Aerospace Inc. LMIA, both carrying a Zacks Rank #1 (Strong Buy) and Engility Holdings, Inc. EGL, carrying a Zacks Rank #2.

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