Northrop Back in the Fight for Jet Contract

Northrop Grumman Corp. is back in the competition to help design the next generation of fighter jets for the U.S. Navy, Air Force and Marines and the British Royal Navy, the company said Thursday.

The Los Angeles-based aerospace firm will join the team headed by Lockheed Martin Corp., which is competing with another team from Boeing Co. for the only big jet contract expected for several decades. Northrop Grumman had previously collaborated with McDonnell Douglas Corp., but that design was eliminated from the competition in November.

Lockheed and Boeing each received $1.1 billion from the federal government to develop a prototype Joint Strike Fighter. The Defense Department will choose the final design in 2001, with the first airplane scheduled for delivery in 2008. About 3,000 planes are expected to be ordered, making the contract worth about $220 billion over 20 years to the eventual winner. An additional 2,000 planes could also be sold overseas.

Bethesda, Md.-based Lockheed and Northrop have not determined how the Los Angeles company would contribute to the JSF development. However, any scenario would involve workers at Northrop Grumman’s Military Aircraft Systems division in El Segundo, Vice President Tony Cantafio said Thursday. Northrop Grumman’s expertise is in systems integration, sensors, radar and avionics.

After McDonnell Douglas was eliminated from the competition to develop the fighter jets, analysts expected Northrop Grumman to align with one of the remaining firms. Thursday, they said Northrop Grumman’s alliance with Lockheed makes sense because Boeing will presumably be working with McDonnell Douglas, if their proposed merger is approved as expected.

Cantafio would not comment on whether Lockheed or Northrop suggested that the two firms work together, nor would he say whether his company had been in talks with Seattle-based Boeing.

Northrop Grumman has strong ties to Boeing--it makes parts for Boeing’s 747, 757, 767 and 777 commercial airplanes. Northrop Grumman has also worked with Lockheed on radar and avionics projects.

Northrop shares surged $1.625 to close at $85.50, and Lockheed Martin shares rose 25 cents to close at $92. Both trade on the New York Stock Exchange.