I will kill strangers and ruin my own!
And that is not all! In addition to the losses, Northrop Grumman does not expect to make a profit from the first five production batches of B-21 bombers.
This is already serious. There is no point in shouting that “the place is cursed,” but the financial “successes” with the F-22 and F-35 have already become the talk of the town. Now the B-21. Apparently, the issue needs to be resolved systematically, but to do this, you first need to understand what is happening overseas.
And there, Northrop Grumman reported losses of almost $1,2 billion on the B-21 Raider stealth bomber program.
The company also stated that it expects a shortfall in profit (consider it a loss) for each of the first five batches of these aircraft. And all this happened just days after the Pentagon announced the first contract for the production of the B-21.
In general, to be honest, there is an opinion that Northrop Grumman... is a little disingenuous. Here, in general, it’s worth looking closely at, why did the bathhouse suddenly catch fire, or rather, such waste? Everyone seems to be smart and educated people, we understand that in order to make a profit, you must first invest something.
And in Northrop Grumman's case, I'm sorry, but the reported loss simply pales in comparison to the revenue the program could generate for the company over its lifetime if it were implemented as currently envisioned.
Northrop Grumman explained that the B-21 program incurred "pre-tax costs" of just under $1,56 billion, according to a press release issued by the company ahead of its quarterly earnings report. Tax offsets reduced the net loss to 1,17 billion.
The first pre-production B-21 Raider during its maiden flight in November 2023
“The losses are largely driven by changes to our funding assumptions to mitigate the impact of macroeconomic disruptions on the LRIP (low-volume initial production) phase of the program and higher projected production costs, which reflect recent negotiations with suppliers and our experience completing the first aircraft.”
, explains a Northrop Grumman press release.“Macroeconomic shocks” include higher-than-expected inflation and other broader economic factors. In general, a company like Northrop Grumman should think about how qualified economists are working on its staff. Or congratulate the company on having an amazing staff of scammers.
In general, of course, “great again,” the dancing on the financial rake in the Pentagon continues. Well, for some reason, experts cannot accurately calculate all the necessary financial options. And again the Pentagon is trying to increase the cost of already contracted products.
I just really want to sympathize.
“In 2015, the U.S. Air Force awarded Northrop Grumman a contract for the B-21 that includes a basic engineering, manufacturing and design (EMD) contract and five initial production options (LRIPs). The EMD phase of the program is largely cost-intensive and began during contract execution. The LRIP options are largely fixed-priced and are expected to be awarded and exercised until approximately the end of the decade.”
“We now believe that it is likely that each of the first five LRIP lots will be executed at a loss.”
, Northrop Grumman said in a statement. The sheer amount the company disclosed today is equivalent to more than 10 percent of what the Air Force expected to spend on LRIP sections 1-5, according to Aviation Week.“We now believe that it is likely that each of the first five LRIP lots will be executed at a loss.”
I don’t even want to comment on anything here; the fact that the Pentagon got into money is already clear and understandable.
The Pentagon awarded the B-21 LRIP Lot 1 contract to Northrop Grumman last fall, but only recently revealed that fact. Exactly when this deal was struck, what it cost, how many aircraft it covers, and whether any LRIP aircraft are currently being built is unknown. We talked about this, the minimum amount of information was disclosed.
First pre-production B-21 in hangar
"While we are disappointed that our assessment of conditions for the low-revenue portion of the initial portion of the B-21 program required this charge this quarter, we are confident in our ability to meet the company's guidance, which remains unchanged,"
said Northrop Grumman CEO Katherine Worden. “We are also proud of the work of the B-21 team as it continues to pursue an unprecedented aircraft development program.”
The Air Force is already in the process of acquiring six pre-production B-21s that will be used for a variety of testing purposes. Some of these aircraft may enter service in the future. The first of these bombers, nicknamed Cerberus, made its maiden flight last year and is currently undergoing flight testing at Edwards Air Force Base in California.
Northrop Grumman's financial problems with the B-21 are not unexpected. Last year, the company warned several times of potential large losses and said they could amount to up to $1,2 billion. This has now proven to be a very accurate prediction. Or – precisely planned.
This partially confirms another statement by Director Warden, last October: “We are now planning for zero profitability for the B-21.”
Well done, we planned it - it worked!
If we rewind the timeline a little, we can remember that a year earlier, in January 2023, Northrop Grumman also announced that the projected unit cost of the B-21 was below the target set by the US Air Force.
That is, one copy of the bomber would cost the Pentagon’s financial department even less than the Air Force expected! But only a year has passed, yes, the B-21 flew, and for some reason this increased the cost of the project by 10%.
Unfortunately, since there is no clear information on the costs of the B-21 program in detail, conclusions remain limited. According to a Bloomberg report, at the time of the B-21 Raider's public unveiling in December 2022, the total cost of the program was $203 billion in FY 2019 dollars, of which “$25,1 billion for development, $64 billion for production and $114 billion for 30 years of maintenance and operation fleet out of 100 bombers".
The total inflation-adjusted cost here is about $243,6 billion in 2023 dollars. However, in the past the Air Force has talked about acquiring 145 B-21s, which would affect the overall cost of the program and the unit cost of each bomber. First of all, these numbers speak to how profitable the B-21 can be for Northrop Grumman over its lifespan.
During the latest announcement, Northrop Grumman CEO Worden said the Air Force has committed about $60 million to fund the B-21 program from a pool set aside by Congress specifically to counter higher-than-expected inflation last year.
This money was specifically tied to the cost of the first phase of the LRIP. Quite a smart move in the conditions of an unstable American economy, but can 60 million become a reliable buffer against inflation? Worden said her company was unsure of any similar budgetary "relief" the U.S. government might provide for future phases of LRIP. She said "budget constraints" have caused Northrop Grumman to lower its expectations in this regard.
"It's important to note that we have much more information today than we did at this time last year when we completed production and ground testing of the first aircraft."
, said Dave Keffer, corporate vice president and chief financial officer of Northrop Grumman. “We also have the majority of suppliers currently under contract and the rest in final negotiations. We have our latest performance and training estimates that we believe are consistent with our historical experience. Perhaps most importantly, we continue to do well with this program, which continues to provide critical capabilities for our customers."
.Despite Northrop Grumman's financial situation, the Air Force and Congress have long argued that the B-21 is a well-planned acquisition program. Air Force officials remain positive about the Raider, Northrop Grumman's capabilities and the bomber's acquisition and fielding schedule. The goal is to begin fielding active B-21 squadrons by 2030.
“The B-21 is going well... as it transitions to LRIP,” said Christine E. Jones, acting undersecretary of the Air Force, at a public event hosted by the Center for Strategic and International Studies (CSIS) think tank in Washington, DC. Colombia. The B-21 program turned out to be right on the price and schedule we expected. So there are no significant changes there.”
Actually, we can put an end to this. The Air Force is critically important to the B-21, which must replace the physically obsolete B-1B and frankly unsuccessful B-2. That’s why they are so calm about Northrop Grumman’s financial aerobatics; it’s more important here that the process goes on without stopping.
In addition to being a key element of the US military's nuclear deterrent triad for years to come, the B-21 will include other capabilities that will have applications beyond nuclear strikes.
In the previous article about the B-21, we said that the Pentagon views the bomber as one of the components of a large family of systems that will interact with each other in combat. That is, the B-21 will be assigned the role of a multi-role aircraft that will have unsurpassed capabilities that go far beyond the traditional “bomber” functions.
It is clear that the Air Force and Northrop Grumman will try to stay on track with the B-21 program, although it remains to be seen whether the program can continue to stay on budget and on schedule.
In any case, this is a situation where there is nowhere to go. The Air Force really needs the B-21, so you will still have to pay as much as Northrop Grumman asks for. It is clear that they will not want to work for the Pentagon for patriotic reasons at a loss, which means that the military can begin preparing arguments for Congress today. Nobody will give you money just like that.
In general, a bomber is a complex matter. He can cause damage not only to the enemy, but also to his own. Just some with blown up bombs and missiles, and some with blown budgets.
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