Air Force runs low on bombs while Congress wrangles over budget
Barrons.com editor Jack Otter on what’s driving aerospace defense stocks.
The U.S. Air Force’s supply of bombs and missiles is running low, and its top civilian official is calling on Congress to approve new defense spending.
The military’s weapons stockpile is already strained by the airstrike campaign against ISIS in the Middle East. Congressional wrangling over the federal government’s budget has exacerbated the problem. Air Force Secretary Heather Wilson warned that the Pentagon can’t secure an increase in production if Congress doesn’t pass a budget. Earlier this month, lawmakers approved a spending freeze for the first three months of fiscal 2018, which begins Oct. 1.
Wilson said without a concrete budget, rather than continuing resolutions that temporarily maintain existing spending levels, it’s difficult for contractors to commit to building more munitions. The lack of budget certainty from the federal government also makes it harder for the military to develop relationships with defense companies.
“We have a continuing resolution, and budget uncertainty impacts our ability to work with industry and give them certainty on the amount that we’re going to buy and ramping that up where we can,” Wilson said at an Air Force Association-sponsored conference, according to Defense One.
The Air Force directly engaged with industry players starting at least four of five months ago, Wilson added. Air Force officials and contractors have discussed expanding production capacity of precision weapons.
The Air Force wants the 2018 budget to increase production of Hellfire missiles, which are manufactured by Lockheed Martin (NYSE:LMT), and small diameter bombs made by Boeing (NYSE:BA) and Raytheon (NYSE:RTN).
The U.S. and its allies have dropped 98,532 bombs since the campaign against ISIS began in 2014, based on data from Air Forces Central Command. Wilson said U.S. aircraft are dropping about 100 precision weapons per day in Iraq and Syria. In order to support the airstrikes, the military has moved weapons to the Middle East from other parts of the world.