August 06, 2013
Raytheon is poised to book billions of dollars’ worth of orders for its Patriot air and missile defense system in the coming months, underscoring the resurgence of a weapon first developed to defend Europe against a possible Soviet attack.
Three decades later, the system has been upgraded multiple times and more than 200 fire units are in use in a dozen countries, with additional customers in talks to buy into a system that just a few years ago looked ready to wind down.
Raytheon Chief Executive William Swanson last month called the system “a never-ending opportunity” after a major redesign as part of a $3.3 billion order from the United Arab Emirates in 2008 that has spawned multiple new orders and launched a new chapter in the program’s history.
“Once you upgrade it you can go back to all your other customers and offer them the upgraded hardware to reduce their costs, reduce the spare content and so forth. So it’s a never-ending opportunity for us here at Raytheon,” Swanson told analysts on an earnings call.
Raytheon builds Patriot - a long-range, high-altitude, all-weather system - and acts as the systems integrator for the PAC-3 missile, which is built by Lockheed Martin Corp (LMT.N).
Raytheon officials say they expect several large orders for Patriot systems in the second half of the year, including a deal for 11 fire units from Qatar valued at around $2 billion. They also expect an order exceeding $500 million from Kuwait that could expand further in coming years through related contracts for modernization, spares and services.
Turkey is also weighing a large order that could be worth around $2 billion, Swanson told investors in April.
The Patriot system is already used by 12 countries - United States, Netherlands, Germany, Japan, Israel, Saudi Arabia, Kuwait, Taiwan, Greece, Spain, South Korea and UAE. Raytheon is in active talks to enlarge that group and upgrade existing systems, according to Tim Glaeser, a vice president with Raytheon’s Integrated Defense Systems (IDS) division.
Poland had considered buying used Patriot equipment from Germany, but is now weighing the purchase of new fire units, and India has expressed an interest, Glaeser said. Singapore and Malaysia are also considering air and missile defense systems.