Latest news with #Sentinel
Yahoo
5 hours ago
- Business
- Yahoo
Defense Earnings Highlight Peril, Payoff of Contracting
These should be the best of times for defense contractors. Last month, NATO members agreed to boost their defense spending target to 5% of GDP by 2035, potentially unleashing hundreds of billions of public-sector dollars into the coffers of military contractors. And earlier this month, President Donald Trump's One Big Beautiful Bill handed the Pentagon a record $1 trillion budget for 2026, a 17% year-over-year increase. But the reality for military suppliers is far more complex. A slew of quarterly reports released last week showed that, even with analysts flashing buy recommendations, all it takes is an overrun on one top-secret program to turn an earnings release into a not-so-secret disappointment. READ ALSO: Trump's 'Biggest Deal Ever' With EU Prompts Yawn From Wall Street and Can Tesla and Samsung Find Salvation in Each Other? The Defense Dilemma Like every other industry, the defense sector has been hindered by inflation in recent years. The distinct disadvantage for contractors is the long-term nature of many of their sales, which were negotiated years ago at lower prices and involve deliveries over extensive periods of time. With no easy fix (you can't shrinkflate an F-35), the Aerospace Industries Association warned last year that defense firms were acting as an inflation 'shock absorber' for the Pentagon, which could ultimately make them less inclined to take on risk. The potential perils of this stress were on full display when America's largest government contractor reported second-quarter performance: Lockheed Martin surprised investors by disclosing $1.6 billion in unexpected charges, most of them ($950 million) related to a classified program with a fixed-price contract signed in 2018. The firm's income fell 80% year over year, from $1.6 billion to $342 million. Lockheed also hacked $1.5 billion off its 2025 operating profit estimate, bringing its forecast down to $6.6 billion, and saw its shares lose 8% through the week. Lockheed was caught in the crosshairs last month when the Pentagon cut an order for F-35s in half, weeks after Boeing won an upset bid over the contractor to replace its F-22 planes. RBC analysts said in a note that Lockheed will need to grow revenue 6.7% in the second half of the year or 'elevated compared to peers' to meet its newly downgraded forecast. About Those Peers: Inflation and price pressures aside, other defense contractors rounded out a solid week. Northrop Grumman raised its annual earnings guidance, citing its Sentinel intercontinental ballistic missile program, which the Pentagon is pouring more money into alongside B-21 stealth bombers. L3Harris, which manufactures rocket motors for Javelin missile systems, beat Wall Street expectations with $5.4 billion in sales. CEO Christopher Kubasik hailed a 'clear inflection point, with our strongest top-line growth in six quarters.' This post first appeared on The Daily Upside. To receive delivering razor sharp analysis and perspective on all things finance, economics, and markets, subscribe to our free The Daily Upside newsletter. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
11 hours ago
- Politics
- Forbes
Trump Said Gifted Qatari Jet Was ‘Free'—But Renovation Cost Could Reportedly Near $1 Billion
Topline The Pentagon appears to be using an over-budget missile project to pay for renovations to the jet Qatar controversially gifted to President Donald Trump earlier this year, according to a new report, despite the president arguing he accepted the plane because it was 'free.' Key Facts The Pentagon classified the cost of the renovations, but a recent $934 million transfer from the budget for a notoriously costly nuclear missile program, known as the Sentinel project, to an unnamed classified project has raised eyebrows that the maneuver was intended to pay for the plane renovations, The New York Times reported over the weekend. Air Force officials have said privately that Sentinel funds will be used to make upgrades to the plane so it can be used as an Air Force One, though it's unclear if the entirety of the $934 million transfer will go toward the renovations, according to the Times, which reported the Air Force said last week it couldn't discuss the cost of the plane because it's classified. Air Force Secretary Troy Meink told Congress in June the Defense Department believed the retrofit would cost $400 million, but engineers and Air Force experts have said the estimate appears low. The Times reported on the observation after Defense Secretary Pete Hegseth signed a memorandum of understanding with Qatar on July 7 stating the plane is an 'unconditional donation' to the Pentagon not to be 'interpreted or construed as, an offer, promise, or acceptance of any form of bribery, undue influence, or corrupt practice.' Trump accepted the 747-8 jumbo jet—which he plans to use as a new Air Force One then donate to his presidential library after leaving office—amid concerns Qatar could use the gift to solicit favor from the Trump administration. The president justified the gift by describing the plane as a 'GIFT, FREE OF CHARGE,' he wrote on Truth Social, and has also said he would be 'stupid' not to accept the jet. Why Did Qatar Give Trump The Plane? Despite Trump claiming the jet is a gift, the Trump administration approached Qatar about the plane after it was informed Boeing was behind schedule in delivering two new planes to be used as Air Force One, according to multiple reports, and likely wouldn't complete the jets until 2027 at the earliest, more than three years behind schedule. The jet was put on the market in 2020 as the Qatari royal family has sought to reduce its own private jet fleet. What Renovations Does The Jet Need? The plane, valued at $400 million, needs to be upgraded with modernized communication and technology systems, antimissile capabilities and an enhanced engine, according to the Times. It will also need to be inspected to ensure the Qataris didn't implant any spying devices. The upgrades are expected to begin imminently and take a year or two to complete. Where Is The Plane Now? In San Antonio, Texas. The plane was flown to a facility there, which the Times reported is known for secret technology projects, from Palm Beach International Airport when the U.S. formally accepted the gift in March. What Is The Sentinel Program? A project to replace and modernize the U.S. Air Force's Minuteman III intercontinental ballistic missile system of ground-based nuclear weapons. The project to replace the aging missiles—approximately 400 of them—has been fraught with costly delays. The Air Force initially told Congress the project would cost $77.7 billion, but the cost has since gone up to $140 billion, according to the Times. Key Background The jet gift raised bipartisan criticism of ethical concerns and the potential for espionage, while Trump's family business dealings in Qatar added another layer of concern. The Trump Organization announced plans in April to build a luxury golf resort in Qatar developed by a company owned by the Qatari government, the Associated Press reported previously. Further Reading Why The Qataris Are Happy To Dump Their 747 On Trump (Forbes) Republicans Question Trump's Plan To Accept Luxury Plane Gift From Qatar (Forbes) Qatar Airways Will Buy 210 Jets From Boeing — As Trump Awaits Qatar's 747 Gift (Forbes) Got a tip? Share confidential information with Forbes. Editorial Standards Reprints & Permissions
a day ago
- Business
US accepts 'unconditional donation' of Qatari jet, cost of retrofitting is classified: Sources
The Trump administration has accepted the 'unconditional donation' of a luxury jet from Qatar, with no stipulation on what should happen to the aircraft after President Donald Trump leaves office, according to an agreement reviewed by ABC News. The memorandum of understanding, or MOU, was signed earlier this month by Defense Secretary Pete Hegseth and Qatar's Minister of State for Defense Affairs, Soud bin Abdulrahman Al-Thani. The deal paves the way for the Air Force to begin the process of retrofitting the plane -- dubbed a 'flying palace' because of its luxurious finishes -- for the president's use. Sources told ABC News earlier this year that after the president left office, the plan called for transferring ownership of the plane to the Trump presidential library foundation. The cost of refurbishing the plane is classified, although lawmakers have speculated that it could cost as much as $1 billion. The Air Force referred questions on the deal to Hegseth's office, which referred a reporter back to the Air Force. 'Why would we ask the American taxpayer to spend upwards of $1 billion on a plane that would then only be used for a handful of months and then transfer directly to the president? That doesn't sound like a wise use of taxpayer dollars,' said Sen. Chris Murphy, D-N.Y., during a Senate hearing in June. Air Force Secretary Troy Meink told lawmakers that the money to refurbish the jet would be pulled from a program intended to replace aging nuclear missiles, called the Sentinel intercontinental ballistic missile program. But Meink said the Sentinel nuclear program, which is over budget, wouldn't be immediately impacted because it was being restructured. Trump has long complained about the primary aircraft used in the current Air Force One fleet, which are Boeing 747-200 jumbo jets that have been operational since 1990. The Air Force is under contract with Boeing to replace those aircraft. 'The aircraft is donated in its current condition ('as is'), without any guarantees or warranties, unless otherwise agreed upon in future arrangements,' the new memo states. 'The donation is unconditional, and the aircraft may be used or disposed of by the DOD in its sole discretion, in any manner it deems appropriate, so long as such use or disposal remains in accordance with United States laws,' the memo later adds. Nothing in the agreement should be 'interpreted or construed' as 'an offer, promise, or acceptance of any form of bribery, undue influence, or corrupt practice,' the memo adds, calling it a 'bona fide gift.'
CBS News
a day ago
- Business
- CBS News
Preparations underway for Qatari jet that will be used as Air Force One
Preparations to refit the Qatari jet that will be used as Air Force One are underway, and floor plans or schematics have been seen by senior U.S. officials, CBS News has learned. A memorandum of understanding, or MOU, between Qatar and the U.S. Defense Department, viewed by CBS News, outlines the "unconditional donation" of one Boeing 747-8 jumbo aircraft. The memorandum was signed earlier this month by Defense Secretary Pete Hegseth and Qatar's deputy prime minister and minister of state for defense affairs. It does not specifically mention Air Force One but says the jet can be used by the Pentagon "in any manner it deems appropriate." Earlier this year, President Trump confirmed that the Qatari royal family was donating a Boeing 747-8 for his use. Valued at $400 million, the jumbo jet is set to be donated to Mr. Trump's presidential library after his term is over. Mr. Trump, in May, called it a "gift." "They knew about it because they buy Boeings, they buy a lot of Boeings, and they knew about it, and they said, we would like to do something," Mr. Trump said. "And if we can get a 747 as a contribution to our Defense Department to use during a couple of years while they're building the other ones, I think that was a very nice gesture. Now I could be a stupid person and say, 'Oh no, we don't want a free plane.'" "Nothing in this MOU is, or shall be interpreted or construed as an offer, promise, or acceptance of any form of bribery, undue influence, or corrupt practice," the memorandum states."The parties affirm that the donation is a bona fide gift." The jet will be donated "as is," which would mean the Pentagon is responsible for any costs to upgrade the plane to enhance its security. One budget official believes the money to pay for upgrades will come from the Sentinel program. The Sentinel is the U.S. military program to replace the 400 silo-based nuclear Minuteman III missiles across the country. The Defense Department admits it's behind schedule and over budget, with cost overruns of 81% since September 2020, and is now estimated to cost the U.S. $141 billion. There are constitutional rules against a president accepting gifts from outside entities, including foreign governments and even members of Congress. Article I of the Constitution prevents any president from accepting a gift or emolument from a "King, Prince, or foreign State," without congressional consent. In May, Democratic Rep. Ritchie Torres of New York said he sent a letter to the Government Accountability Office urging an investigation into the Trump administration accepting a plane as a gift. The Washington Post reported on Saturday that the U.S. government and Qatar are expected to finalize the agreement this week. A source told CBS News in May that the plane needs to be checked for security and spying devices before it is accepted. Renovations that could cost hundreds of millions will need to be done before the plane is ready to be used as Air Force One, the Air Force secretary said last month. Jennifer Jacobs contributed to this report.
The Hill
a day ago
- Politics
- The Hill
Hegseth rerouting Pentagon funds to refurbish Qatari jet into Air Force One
Let's talk about planes, power, and priorities. Defense Secretary Pete Hegseth just found nearly a billion dollars — $934 million to be exact — hidden deep in the Pentagon couch cushions. That money was supposed to fund Sentinel, a $77.7 billion modernization project for America's aging nuclear missile system. Instead, it's being rerouted to a classified project. But here's what we know about that classified project, thanks to reporting from The New York Times: part of it is funding a personal, Qatar-backed Air Force One project for President Trump. Yes, you heard that right. Remember that Boeing 747-8 plane that the Qatari royal family donated to Trump earlier this year, well, it's now being retrofitted for the commander-in-chief. The Secretary of the Air Force estimates the job will cost 'less than $400 million,' but aviation experts and engineers say that number is optimistic at best. NBC News reported that the actual cost could climb north of $1 billion — possibly more — especially since the aircraft needs to be stripped nearly to the studs to install encrypted communications, harden defenses, and protect against cyber and physical threats. And the kicker? This plane probably won't even be used for long. President Trump has said it will eventually be housed at his yet-to-be-built presidential library after he leaves office in 2029. That library, by the way, is shaping up to be quite the monument to Trump's legal and financial battles. He's already received two settlements — one from Disney and another from Paramount, totaling $32 million — to fund it. That's not exactly the 'people's library,' is it? Let me be clear: there are ethical questions here — like, why we're accepting a jet from a foreign government, even a friendly one like Qatar. The Emoluments Clause in the U.S. Constitution prevents the president from accepting a gift from a 'King, Prince, or foreign State,' without congressional consent. But even if you put that aside for a moment, there's a much bigger issue that should concern Democrats, Republicans, and especially so-called fiscal conservatives: We're spending money we simply don't have. CBS News recently dug into Treasury Department reports and found that in Trump's first 100 days back in office, the federal government spent more than $200 billion more than it had during the same period last year. We're spending more, day-to-day, than we have in nine of the past ten years. The only year that beats this one was 2021 — the height of the pandemic, when we were trying to avoid a full-blown economic collapse. And just this month, the president signed what he called a 'big, beautiful bill' into law. Beautiful for whom, exactly? Because the nonpartisan Congressional Budget Office says it's going to add $3.4 trillion to the national debt over the next decade. That's not a rounding error. That's generational debt. So when we look at this reboot of Air Force One — a Qatari jet, rerouted Pentagon funds, and a cost that could spiral into the billions — we have to ask: Whom is this actually serving? It's not the next president. It's not the American taxpayer. And it's certainly not the men and women who depend on the defense programs now losing funding. It's just another example of how power — when unchecked — bends systems to personal benefit. So here's my lens: Whether you're red or blue, MAGA or moderate, we should all be able to agree that national defense dollars should not become personal vanity projects. Not when families are struggling, the deficit is ballooning, and our country's infrastructure — both physical and financial — needs urgent attention. Because the true cost of this plane won't be measured in dollars alone. It'll be measured in what we neglected to fund instead.
