How Great Britain's New Massive Aircraft Carrier Could Make Billions for One American Company

Before you go, we thought you'd like these...
Before you go close icon

For decades -- centuries -- "Brittania ruled the waves." But today, the Royal Navy is on the cusp of irrelevance.

Next year, its last operational aircraft carrier, the HMS Illustrious, is set to retire. (Its air wing has already departed). When that happens, the mighty British navy will be... aircraft carrier-less.

Once upon a time, Britain had a navy. Its carrier fleet, c. 1945. Source: Wikimedia Commons

The queen is dead. Long live the queen!
And yet, Illustrious' retirement sets the stage for a new age in aircraft carriers for the Royal Navy. That same year, Britain aims to launch the lead vessel of a new class of carriers, the HMS Queen Elizabeth.

The new Queen will be a technological marvel, equipped with a new "highly mechanized weapon handling system" that can be operated, in a pinch, by as few as a dozen sailors. The entire vessel, twice the size of the carrier it is replacing, will boast a crew of only 679 souls -- just two dozen more than manned the Illustrious.

When built, the HMS Queen Elizabeth will become the fourth-largest carrier class on the planet. Source: Wikimedia Commons

On combat operations, the Queen Elizabeth will carry as many as 40 aircraft. The ship's crowning glory will be its complement of as many as 36 of Lockheed Martin's new F-35B Lightning II fighter jets. A mix of Boeing Chinook and AgustaWestland Merlin helicopters will likely accompany them, along with, potentially, tiltrotor Ospreys built by Boeing and Textron .

But it's the F-35s that are key for Lockheed Martin. You see, the Queen Elizabeth remains several years from actual service. Even if it launches next year, sea trials aren't scheduled to begin before 2017, flight trials in 2018, and actual entry into service until 2020. But already, the United Kingdom is gearing up to make some pretty big buys of Lockheed Martin's uber-fighter to outfit its new flagship.

Bogeys on the horizon
So far, the U.K. has taken delivery of three F-35s from Lockheed. Last month, the U.K. Ministry of Defence ordered its fourth bird. The MoD is now in talks to purchase a flight of 14 more F-35s -- en route to fulfilling its commitment to buy a total of 48, minimum.

And that's only the start. When Britain signed up to help develop the new stealth fighter as part of a multinational "coalition of the paying," the MoD said it wanted up to 138 F-35s. These planes would then be split between the Royal Air Force and the Royal Navy. But in particular, Britain designed the Queen Elizabeth "from the ground-up" as a vehicle for delivering F-35s to their targets. So once the carrier is commissioned into service, it will account for a big chunk of the nation's F-35 force.

What's more, the U.K. is still considering whether to build a second carrier of the QE class -- the anticipated HMS Prince of Wales. If this gets built, Britain will have to exceed its current commitment to buy 48 F-35s. Indeed, with the aerial detachments on these two vessels accounting more than half of Britain's original planned purchase, the UK could wind up buying more planes than it originally anticipated -- rather than cutting its original order short.

Foolish takeaway
At a per-plane cost exceeding $100 million, Lockheed Martin's F-35 stealth fighter is a plane that could bust many defense budgets. But the more countries that place orders for it -- and the more planes each country adds to its order -- the lower the plane's per-unit cost declines, encouraging still more orders from new buyers.

Right now, worst-case, Britain's commitments for F-35 purchases should add $4.8 billion to Lockheed's revenue stream. Once the Queen Elizabeth comes on line, that number could grow, and if the Prince of Wales follows the Queen to sea, it will mean even more money for Lockheed. Potentially, $13.8 billion -- or more.

HMS Queen Elizabeth -- charting a more profitable future for Lockheed. Source: UK Ministry of Defence

Oh, and one more thing
Did we mention how Lockheed Martin shares its wealth, by paying its shareholders a 3.9% dividend yield? Mustn't forget that bit -- because dividend stocks can make you rich. It's as simple as that.

While they don't garner the notability of high-flying tech stocks, dividend-paying stocks are also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

The article How Great Britain's New Massive Aircraft Carrier Could Make Billions for One American Company originally appeared on

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin and Textron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading