Pentagon Wants a New A-10 Warthog, but Defense Contractors Say 'Pass'

By Rich Smith Industries Fool.com

"Imagine an unstoppable commercial Learjet with a full-automatic cannon in its nose and an iron bathtub surrounding the cockpit.That gives you some idea of the A-10's appearance and performance."

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That's how Mother Jones describes the U.S. Air Force's A-10 Thunderbolt II, a 1970s-vintage close air support (CAS) fighter lovingly referred to as the "Warthog" for its homely appearance. Ugly the A-10 may be, but experts aver that the Warthog is also "the best CAS platform mankind has ever designed."

And yet, as this aircraft enters its fifth decade of service, the Air Force worries that the A-10 Warthog is getting a bit long in the tooth. Multiple rounds of upgrades by "prime" contractors Lockheed Martin (LMT) and Northrop Grumman (NOC), and even brand-new wing-sets manufactured by Boeing (BA), can keep the Warthog flying for years to come. But no plane can fly forever.

Eventually, the Air Force will need to replace the Warthog -- perhaps with Lockheed Martin's own F-35 stealth fighter (as the Air Force has repeatedly tried to do), or perhaps with something else. Foreseeing this day, about a year ago, the Air Force announced a plan to begin vetting potential replacements for the A-10's ground support mission -- specifically, a light attack fighter yet-to-be-named but temporarily dubbed the "OA-X."

This A-10 Warthog seems to take umbrage at the idea that any other plane could replace it. Image source: Getty Images.

What is OA-X?

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The Air Force wants to buy 300 light attack OA-X fighter planes -- this is known. What is not known (yet) is precisely what plane OA-X refers to, or will be.

Reportedly, the guiding principle of picking an OA-X will be cost, both cost to acquire (the Air Force would really like to buy an off-the-shelf, already-existing warbird rather than develop something all new) and cost to operate. In the latter regard, the Air Force would probably prefer a fuel-sipping turboprop design over a jet-powered aircraft -- although the latter would surely be more survivable. Weapons-wise, OA-X should be armable to the teeth, capable of carrying everything from smart bombs to air-to-air missiles, ground attack rockets, and .50-cal machine guns.

Who will win the OA-X contract?

As one half of the "Prime Team" responsible for keeping the Warthog flying (and the inheritor of all of the A-10's technical data, after original manufacturer Fairchild-Republic went defunct), Northrop is probably best-positioned to know what kind of low-cost aircraft can best replace the A-10's mission. There's a question, though, as to whether Northrop Grumman will compete on this contract at all.

Right now, Northrop arguably has its hands full trying to win the Air Force's much bigger "T-X" trainer jet contract, which, with a potential value of $50 billion, is a much more valuable prize than OA-X. Compared to that, the value of winning the OA-X contract (perhaps $4.5 billion for 300 aircraft priced at $15 million a pop,for example) might not hold much interest. Indeed, already, two of Northrop's rivals on T-X -- Boeing and Lockheed Martin -- have indicated they will passon OA-X, perhaps to better focus their efforts on winning the trainer contract away from Northrop.

That leaves second-tier aerospace builder Textron (NYSE: TXT) as the potential front-runner for winning OA-X. For years, Textron has been trying to interest the Air Force (or anyone else, really) in buying its internally developed Scorpion fighter jet for light attack missions. Textron also builds the AT-6 Wolverine, a prop-driven light attack bird once mooted for consideration as a light attack plane for the Afghan air force.

With two ready-built aircraft to offer the U.S. Air Force for its light attack needs, Textron already has a head start in competing for OA-X. And with annual revenue of only $4.9 billion from its aviation division, the company might have more than ordinary interest in winning a $4.5 billion OA-X contract -- and the extra years' revenues that come with it. Both of these factors suggest Textron will pursue this contract doggedly. If Northrop does want to win this one, though, it had better get a move on.

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Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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