Northrop Drive to Sell Additional B-2s Passes Key Hurdle : Aerospace: House defeats measure to block funding for more bombers. Vote is major victory for the firm.
Northrop Grumman Corp.’s proposal to sell the Pentagon 20 additional B-2 Stealth bombers passed one of its last key tests in Congress on Thursday, when the House voted down a last-ditch effort to cut about $500 million in initial B-2 production funding.
By a razor-thin margin of 213 to 210, the House defeated an amendment offered by Rep. John R. Kasich (R-Ohio) that would have deleted the B-2 funding from the 1996 Defense Appropriations Bill.
Despite the narrow margin, the vote is a major victory in a battle that few outside analysts believed Northrop or its B-2 supporters in Congress could win, particularly because the Defense Department does not want the additional planes.
If Northrop wins an order for more bombers, production lines in Palmdale will not close in 1997 as currently planned but would be kept open for up to an additional decade, depending on the production rates.
An order for more B-2s, coupled with an increasingly favorable outlook for the future of the McDonnell Douglas C-17 cargo jet program, would sustain Southern California as a key military aircraft production center.
The $500 million in the bill is just the first down payment for what will ultimately cost $15 billion to double the fleet of future B-2s to 40 aircraft--a proposal that generated heated denouncements by critics who called the program unnecessary and too expensive.
The House funding measure approved Thursday will be sent to a conference committee, which must reconcile the House bill with a Senate appropriations bill that contains no funding for additional bombers. Similarly, the Senate left the B-2 out of its defense authorization bill this year, while the House put it in.
While the Senate has no additional bombers in its legislation, it does fund new submarine construction, which the House rejected. The compromise is likely to pit the B-2 against Navy submarines, said Rep. Jane Harman (D-Rolling Hills), a strong B-2 supporter.
Congressional leadership is stacked with B-2 supporters, including Senate Appropriations Committee Chairman Ted Stevens (R-Alaska) and ranking Democrat Sen. Daniel K. Inouye (D-Hawaii). Similarly, Senate Armed Services Committee Chairman Sen. Strom Thurmond (R-S.C.), ranking Democrat Sen. Sam Nunn (D-Ga.), Sen. Bob Dole (R-Kan.) and Rep. Newt Gingrich (R-Ga.) have all also been important B-2 boosters.
The only question is whether House and Senate leaders can persuade members to go along, according to Rep. Norm Dicks (D-Wash.), who helped orchestrate the victory Thursday. “We are going to win this,” Dicks said.
Byron Callan, an aerospace analyst for Merrill Lynch & Co., said even if Northrop gets the $500 million in funding this year, it will face repeated efforts to kill it every year until the Pentagon finally supports the program.
Callan estimates that if Northrop does get 20 new orders, it would earn $8.10 per share by 1998, compared to $6.30 per share without the orders.
“It has gone further than I would have expected,” Callan said. “But we have only seen the tip of the iceberg of this issue so far.”
