Lockheed Martin scores first major victory in German defense spending spree

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A month after German Chancellor Olaf Scholz announced a $110 billion spending spree to modernize the country’s armed forces, US defense contractor Lockheed Martin has emerged as the first big winner.

Germany announced on Monday that it plans to buy F-35 fighter jets from Lockheed to replace its aging Tornado bombers, remnants of an earlier era of conflict with Russia.

Biggest takeoff since Hasselhoff

Germany received its first Tornado bombers in 1981, years before the fall of communist East Germany and David Hasselhoff singing “freedom‘ in a bright leather jacket above a soon to be toppled Berlin Wall. In recent years, the allies have accused reunified Germany of failing to meet NATO’s 2% GDP target for defense spending, which sparked a debate at home because of shame over the country’s Nazi past Russia’s invasion of Ukraine prompted the recent 180.

Germany has considered spending its military refresh funds on Lockheed’s F-35s or Boeing’s F/A-18 Super Hornet. Lockheed, whose planes have better stealth capabilities, won out. The F-35s will be used as part of Germany’s “nuclear sharing” role, which refers to NATO countries that do not have nuclear arsenals but participate in planning the deployment of nuclear weapons.

Belgium, the Netherlands and Italy have also chosen the F-35s for their nuclear sharing missions. While this is a big deal for Lockheed, all of the recent defense news has already pointed to big gains for the company:

  • Lockheed was up 1.6% in pre-market trading on Monday but then evened out – the stock is already up 28% on the year because disputes mean business.
  • The number of F-35s Germany plans to order is still unknown – a single F-35 costs $100 million and Germany plans to replace 90 Tornado bombers, but it could end up being with a mix of different planes .

What is war for? Spend, and not just in Germany. On Saturday, US President Joe Biden greenlighted $200 million in US military aid to Ukraine, bringing total US aid to $1.2 billion since January 2021, according to the House. White. For context, the United States distributed approximately $11 billion in total military aid in fiscal year 2020 (the most recent year for which data is available).

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