Key insights
- The Pentagon is increasing defense production with BAE, Lockheed, and Honeywell due to heightened geopolitical tensions following the US and Israel launching a war on Iran. This signals increased government spending in the defense sector, potentially boosting the earnings and stock prices of these companies. The shift to a "wartime footing" suggests sustained demand and long-term growth opportunities for defense contractors.
WASHINGTON, March 25 (Reuters) - The Pentagon said on Wednesday it had reached framework agreements with BAE, Lockheed and Honeywell to boost production of defense systems and munitions as part of its shift to "wartime footing."
Under the deals, Honeywell Aerospace will "surge production of critical components for America's munitions stockpile," as part of a $500 million multi-year investment, the Pentagon said.
BAE Systems and Lockheed Martin will also quadruple production of seekers for the Terminal High Altitude Area Defense (THAAD) interceptor, while a new framework agreement with Lockheed will accelerate production of its Precision Strike Missile, the Pentagon added.
The announcements come more than three weeks after U.S. President Donald Trump and Israel launched a war on Iran.
(Reporting by Susan Heavey; Editing by Doina Chiacu)