Northrop Grumman's New Robo-Helo Could Save Money, Make Money


Northrop Grumman has a second Fire Scout locked, loaded, and ready for flight tests.

Less than a month after helping the Navy test-fly its first upgraded Fire Scout robotic helicopter, Northropannounced Monday that its new birds have taken another hop toward operational status. Northrop sent the Navy a second robotic helicopter this week. If all goes well, the new and improved Fire Scout could be ready for real-world operations sometime next year.

The new and improved MQ-8C Fire Scout. Source: Northrop Grumman

Northrop designed the upgraded Fire Scout, designated the MQ-8C, to fly twice as long and carry three times more intelligence, surveillance and reconnaissance equipment than the existing MQ-8B Fire Scout. The new bird carries more fuel tanks than the original, feeding into an upgraded engine, enabling the MQ-8C to fly for up to 12 hours or carry up to 2,600 pounds of payload.

Upgrades like these don't come cheap. The U.S. Navy has already invested $154 million in paying to develop an improved Fire Scout. Northrop also expects to charge more for each Fire Scout it sells to the Navy (which has ordered a total of 14 of the next-gen helos, and plans to purchase 30 eventually). Estimates suggest the next-gen MQ-8C could cost about 10% more than its predecessor -- perhaps $11.5 million apiece. And yet, it could still be a bargain.

Fire Scout is a win-win
The Navy originally planned to equip its new Littoral Combat Ships with Fire Scouts, you see, and assumed it would need each LCS to carry a pair of Fire Scouts to cover the surface area an LCS would need to recon. At MQ-8B prices, that would have added about $20 million to the cost of an LCS equipped for such missions.

Now here's the good news: The MQ-8C's more robust capabilities (remember -- it's got twice the flying time of the MQ-8B) now have the Navy thinking that it may be able to get by with just a single Fire Scout per LCS. So even at $11.5 million a pop, the Navy should be saving money from the upgrade.

Plus, by not having to tote around two robotic whirlybirds to accomplish its mission, and LCS will have extra room aboard to carry other mission modules -- extra cannon, more missiles, or perhaps even an armed MH-60R Seahawk helicopter to back up the unmanned, unarmed Fire Scout.

The new bird's additional capabilities, and higher price tag, should make it more attractive to Pentagon buyers operating in a constrained spending environment. Not even counting international sales, or sales to other services (the current Fire Scout is also on duty in Afghanistan), this could easily turn into a $345 million product for Northrop.

Invest in dominant companies
It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses and keep them for the long term. And when it comes to unmanned aerial vehicles, there's no company more dominant in Northrop. Want to find more such opportunities? In the special free report, "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.

The article Northrop Grumman's New Robo-Helo Could Save Money, Make Money originally appeared on

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Northrop Grumman. 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.

Originally published