Lockheed Martin to Test Missile-Interceptor System Again

Lockheed Martin Corp., the world’s largest defense contractor, will test its missile-interceptor system today after six straight failures, the last of which cost the company a $15-million penalty.

Lockheed is developing the Theater High Altitude Area Defense system, or THAAD, to be the Pentagon’s primary system for protecting troops, airports, bases and even cities from short-range ballistic missiles. The last attempt of the system was postponed May 25 after a target missile failed to fly properly.

The THAAD system is designed to destroy such missiles as the Scuds, which Iraq shot at U.S. troops during the 1991 Persian Gulf War. The system is part of a $4-billion Pentagon research and development program. If the system proves to be successful, the potential production value to Lockheed could be $13 billion.

“A hit would be a loud, welcome sigh of relief, a miss another bucket of cold water,” Merrill Lynch analyst Byron Callan said.

The THAAD system will be tested at White Sands Missile Range in New Mexico. When THAAD was tested in March, an interceptor missile flew past its target, causing Lockheed to pay the U.S. government the $15-million penalty.

Lockheed may lose an additional $20 million if it doesn’t have two successful intercept tests this summer. The company took a first-quarter reserve in that amount in case of another failure.

Shares of Bethesda, Md.-based Lockheed rose 75 cents to close at $41.50 on the New York Stock Exchange.