Honeywell Aerospace plans $500 million plant to add internal complex machining

The Department of War and Lockheed Martin are discussing an F-35 deal that could span up to a decade and cover both production and sustainment, Breaking Defense reported Friday, citing people familiar with the negotiations. Lockheed told the outlet it "continues to advocate for a multi-year contracting approach," and the F-35 Joint Program Office and the Pentagon declined to comment.¹

Senate Armed Services Committeewould permit the Pentagon to enter into multi-year procurement contracts for the F-35contingent

Both the House and Senate will need to hammer out agreed upon language before Congress passes the finalized bill

House version of the billthe Pentagon must also demonstrate the multi-year contract achieves cost savings of at least 5 percentcontingent

would not authorize F-35 multiyear procurement until the defense secretary certifies the contract includes the full complement of initial spare parts and alternate mission equipment for each aircraft

The Pentagon and Lockheed Martin are in discussions over an F-35 deal that could span up to a decade and include both production and maintenance, according to people familiar with the negotiations.

Reported by Breaking Defense, Oct. 9, 2026

Sources

• breakingdefense.com ↗

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Matt Milas, president of Honeywell Aerospace's defense division, told Breaking Defense in September the "big benefit" would largely be on the sustainment side, since production is expected to stay at 156 jets a year. He said the deal could include "bulk buys" of spare parts, with more components flowing from around the 21st production lot, expected in roughly three years. Sustainment is the half neither chamber's bill explicitly authorizes, Breaking Defense reported.¹

The Senate Armed Services Committee's bill and the House version would permit F-35 multiyear procurement contracts, Breaking Defense reported. The House adds conditions: certification that the contract includes "the full complement of initial spare parts and alternate mission equipment" for each jet, and a demonstration of cost savings of at least 5%.¹

Lockheed previously pushed for a larger sustainment deal, a five-year performance-based logistics (PBL) contract. Lawmakers required the Pentagon to certify such a deal would cut maintenance costs or raise readiness, a hurdle officials couldn't clear, Breaking Defense reported. One source familiar with the negotiations called the sustainment proposal "PBL by another name." Dina Halvorsen, Lockheed's vice president of F-35 global sustainment, told reporters Sept. 14 that a multiyear performance-based contract "is still in discussion," adding, "I wouldn't necessarily call it a PBL."¹

Kratos plans to increase turbojet production to address expected customer demand for jet engines for small cruise missiles and drones. Its 2027 forecast assumes about 1,500 engines sold, with most deliveries in the second half.¹

Planned productionUp to 3,000

Forecast salesApproximately 1,500

Kratos forecasts the significant majority of engine deliveries in the second half of 2027.

Source: Kratos third-quarter 2026 results. As of Nov. 5, 2026.

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Kratos's fiscal 2026 and 2027 cash flow estimates include working capital for materials, components and equipment to increase production of turbojet engines up to 3,000 engines produced in 2027.¹

Third-quarter 2026 revenue grew 35.7% year over year. Organic growth, excluding the current-year contribution from acquisitions, was 23.2%. Turbine Technologies posted 27.1% organic revenue growth.¹

Growth is already absorbing cash. Third-quarter 2026 operations used $5.2 million, which Kratos attributed primarily to receivables growth, alongside inventory increases tied to production ramps and development investments.¹

For full year 2026, Kratos forecasts free cash flow use of $110 million to $120 million. It forecasts capital expenditures of $100 million to $110 million. It expects investments in inventory, property, plant, equipment and facilities to continue at least throughout fiscal 2027.¹

Kratos raised $1,348.4 million from common stock issuance, net of issuance costs, in the first nine months of fiscal 2026. It ended the quarter with $1,404.3 million in cash and cash equivalents.¹

Separately, third-quarter Unmanned Systems revenue fell to $74.6 million from $87.2 million a year earlier. Kratos attributed the decline to a prior-year shipment of Valkyries to an international customer that generated $16.1 million.¹