The Air Force Asked L3Harris: Can You Build Us a Fighter Plane for Less Than $50 Million?

Core Insights - L3Harris has been awarded a $3 billion contract to deliver 75 modified Air Tractor AT-802U Sky Warden turboprop aircraft for the U.S. Special Operations Command (SOCOM) [3] - The new aircraft, named Skyraider II, is designed for close air support and can carry up to 6,000 pounds of ordnance, making it comparable to the F-35 in terms of load capacity [4][6] - The program could generate approximately$580 million in incremental revenue for L3Harris as early as this year, although this represents only 2.7% of the company's annual revenue [7] Company Overview - L3Harris is not traditionally associated with fighter planes, focusing instead on radios, sensors, and rocket engines [1][2] - The company has already built the first two Skyraiders and plans to deliver operationally configured planes early this year [6] - The Air Force has reduced its order to 62 planes, with a per-plane cost of approximately $48.4 million [5] Market Potential - There is significant international interest in the Skyraider II, with 22 potential overseas buyers and another 15 countries considering the aircraft [8][9] - The program's success could position L3Harris favorably in the global defense market, expanding beyond SOCOM and the U.S. [8] Financial Considerations - L3Harris stock is currently priced at 28 times trailing earnings, necessitating mid-teens annual growth to be considered a buy [10] - Analysts project that L3Harris may struggle to achieve earnings growth beyond 7% annually over the next five years [10][11]