Northrop Grumman suffered significant financial hitches while transitioning the B-21 Raider into low-rate initial production. The company recorded an almost $1.6 billion pre-tax charge in the fourth quarter of 2023 due to increased production costs and macroeconomic factors disrupting the firm. This charge comprised a cost growth on the first LRIP lot amounting to $143 million.
The U.S. Air Force will deploy more than 100 B-21 Raider stealth bombers by the mid-2020s, assuming they could penetrate deep into enemy territory with strike missions, even against advanced radar and air defenses.
Despite financial setbacks, the B-21 program was remarkably a success and is still on track. The aircraft was recently unveiled in December 2022 and entered into the flight testing stage nearly a year later at Edwards Air Force Base, California. The ground and flight tests of the B-21 received approval from the Pentagon, resulting in the beginning of production by late last year.
But Northrop Grumman’s chief executive, Kathy Warden, had told investors all of last year to expect losses as production got underway on the B-21. And so it was only a matter of time before those losses came in the form of nearly $1.3 billion lost for Northrop’s aeronautics sector in the quarter, and a net loss of $535 million for the company.
The first B-21 Raider stealth bomber will make its maiden flight in 2023, said Air Force Secretary Frank Kendall, though he noted the expected date had slipped a few months.
For all of 2023, Northrop’s aerospace group lost $473 million. The company as a whole made $2.1 billion. Warden said the Air Force had about $50 million in the first LRIP lot in relief from inflation funding. He told investors not to look for any future relief.
Northrop continues to work with the government to discuss other inflation relief options but Warden tempered that optimism as the Pentagon continues to continue to tighten up their budgets. According to CFO Dave Keffer, with the completion of the first production and ground test of the B-21, the company is better off in terms of numbers while having most of its suppliers on contract for the Raider program.
In yet another related development, Northrop Grumman is also turning a blind eye to cost problems with the LGM-35A Sentinel nuclear missile. The Air Force recently sent a notification to Congress that the program cost had jumped by at least 37% as the development now pulls a critical Nunn-McCurdy breach and an automatic review. Lt. Gen. Richard Moore said extending the life of the aging Minuteman III ICBMs is not an option.
Northrop Grumman’s first- and second-stage solid rocket motors have completed fire tests successfully. The company can now move forward into qualification testing. Cost growth on Sentinel estimated inflation since 2020. Warden said that much of the cost growth was in the command and launch segment, which involves building a new set of launch facilities and lots of infrastructure work.
Contrary to these financial issues, Northrop Grumman has accomplished much with the B-21 Raider. The aircraft is being produced at a record-breaking speed and less than budget estimates. According to GlobalData Defence Analyst James Marques, “The B-21 is the first ever sixth-generation aircraft, producing in record time.” Considering inflation, one can calculate the per-unit cost of the aircraft to around $750 million; the development cost had gone down compared to each of the old B-2 bombers that came out costing each about $2 billion.
This has been starkly different from the majority of major programs of the U.S. defense arm, especially when compared to the Lockheed Martin F-35 Lightning II Joint Strike Fighter, which started facing modernization and development problems ten years ago. According to Marques, “the U.S. defense industry almost invariably experienced delays combined with skyrocketing costs in its prior major programs, but not so with the B-21, whose approach Northrop took appears very successful.”.
The B-21 Raider has only recently started flight testing at Edwards Air Force Base, but its test team is working hard to build test aircraft as representative of production units as possible. The first production batch – initially predicted to cost $4 billion – has thus far only cost $2.7 billion.
Advocating the acquisition of the B-21 in large numbers, a recent paper by the Hudson Institute celebrates its unparalleled stealth capabilities and strategic deterrence potential. A planned buy of only 100 Raiders is woefully inadequate to truly deter U.S. adversaries or execute necessary missions to defeat them. The authors urge the doubling of the buy and raising the issue before Congress to adjust funding and prepare for additional production.
Dr. Christopher Bowie, on the stealth properties of B-21, simply says that the only thing he looks forward to is that B-21 should have a smaller radar cross-section than that of B-2 which was revealed by Air Force just 30 years after entering service. Carrying stealth in other ways, the B-21 took a different take in defense procurement when acquired through the Air Force’s Rapid Capabilities Office, which in turn could allow for more secrecy and less public attention.
With conventional or nuclear payloads optional and standoff precision capability, the B-21 may hold highly sensitive enemy infrastructure at risk and threaten naval fleets in blue water. The authors of this paper will argue that buying in bulk will capitalize on economies of scale, lowering the unit cost of each B-21 with a larger overall investment.