Source: Wikimedia Commons.
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The Fairchild-Republic A-10 Thunderbolt II "Warthog" fighter jet has many fans in Congress and in the Armed Forces alike -- but U.S. Air Force Maj. Gen. James Post is not one of them. Speaking out against the plane at a recent Tactics Review Board meeting at Nellis Air Force Base, he garnered some unwelcome media attention. Now his comments have sparked an official investigation.
Prefacing comments with a promise to "deny it" if quoted, the Air Combat Command vice commander apparently threatened officers supportingthe A-10 Thunderbolt IIfighter-bomber with prison time if they spoke out publicly against Air Force plans to retire the plane.Specifically, Post said: "Anyone who is passing information to Congress about A-10 capabilities is committing treason."
Pentagon spinmasters promptly clarified that the general was only trying "to communicate the Air Force's position ... on recommended actions and strategic choices faced for the current constrained fiscal environment," according to an email from a spokesperson to Military.com.An Air Combat Command spokesperson similarly characterized the general's use of the word "treason" as intentional hyperbole.
Maj. Gen. Post. "Just kidding! Can't you take a joke?" Photo source:U.S. Air Force.
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But the damage was already done, and the Interwebs lit up like a proverbial Christmas tree. Defense analysts, bloggers -- even U.S. senators -- were irked by the accusation that praising an aircraft that is taking the fight to ISISin Iraq and Syria, and encouraging Congress to keep funding an aircraft that the Air Force wants to retire, was somehow tantamount to "treason." Nor did they accept the Air Force's "hyperbole" characterization -- with some attendees at Gen. Post's talk saying his threat appeared to violate Art. 10, Sec. 1043 of the U.S. Code, which guarantees service members the right to speak openly to Congress. In light of which, Senate Armed Services Committee Chairman John McCain called upon Air Force Secretary Deborah Lee James to investigate whether Post's comments unduly restricted Air Force officers' right to free speech.
Now, the Air Force is backpedaling. This week we learned that, under pressure from Congress, the Air Force has begun an official investigation of Post.
What it means to investors
It's actually a bit disappointing that Post is taking the brunt of the blame on this. After all, while his choice of words was clearly beyond the pale, the sentiment the general espoused really only mirrored the Air Force's party linein recent budget squabbles.
In a nutshell, the Air Force wants to buy new F-35 fighter jets from Lockheed Martin -- buy as many jets as possible, and buy them as quickly as possible, in order to scale up production and drop the unit cost per plane. The need to spend $337 million annually to keep the A-10 Thunderbolt II fleet flying, however, interferes with that goal. At a minimum, every $300 million-odd spent on A-10sequals two or three F-35s that the Air Force can't buy each year.
So what does all this mean to investors?
It breaks down like this: Currently, only three companies have a real stake in keeping the A-10 Thunderbolt II flying:
- Northrop Grumman , which acquired essentially all assets of the A-10 program from Fairchild-Republic in 1987, earns tens of millions of dollars annually to keep the plane flying. To cite just one example, the A-10 fleet is part of a series of contracts Northrop has won in recent years to install "LITENING" targeting pods throughout multiple Air Force jet models -- contracts worth in excess of $750 million in aggregate. That's a not-insubstantial part of Northrop's $24 billion revenue stream.
- Boeing also has a stake in the A-10 -- specifically, a 2013 contract to "continue improving U.S. Air Force A-10 Thunderbolt II mission readiness" by upgrading the wings on older A-10s. The most recent Air Force order for this project amounted to $212 million. While that sounds like a lot of money, and while Boeing would certainly not forgo it willingly, it's really a drop in the bucket for the company, whichS&P Capital IQreported did well over $90 billion in business last year.
- Lockheed Martin, meanwhile, has to feel a bit conflicted about the A-10. On one hand, it has partnered with Northrop as a member of the "A-10 Prime Team" to keep the fighter flying. On the other hand, the company's own F-35 stealth fighter is obviously a much bigger deal for Lockheed Martin, and could eventually come to constitute 50% of its business. If push comes to shove, Lockheed would likely push the A-10 off a cliff -- if it means selling more F-35s to the Air Force.
Where do we go from here?
There are other players in the A-10 program, of course. But these are the three big ones. And as you can see, the numbers basically boil down to a contest between Northrop Grumman's lobbyists, allied with Air Force fighter pilots, versus Lockheed Martin's lobbyists, allied with Air Force brass/bean-counters.
At present, the brass is winning. According to data from Flightglobal's 2015 report on World Air Forces,the Air Force's roster lists only 288 A-10 Thunderbolt IIs. That's down from 315 last year and 351 two years ago. Furthermore, President Barack Obama's 2016 proposed defense budget calls for decommissioning all remaining A-10s.
That calculus could change, however, if the controversy over Post's comments inspires more support for the A-10 in Congress -- or forces the Air Force to tone down its criticism of the aircraft. Remember: Only two budget cycles remain between now and a new president sitting in the Oval Office. If that new executive proves more favorable to the A-10 than the present occupant, the A-10 could get a new lease on life.
Sunset for the A-10 Thunderbolt II Warthog? Or a new dawn? Photo source: U.S. Air Force.
The article America's A-10 Thunderbolt Warthog: Is It "Treason" to Love It? originally appeared on Fool.com.
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