As Kratos continues working to complete its 12 Valkyrie drones tied to its first production lot and make deliveries to the Air Force, company officials are formulating plans for a second batch of the aircraft next year.
Eric DeMarco, Kratos’ president and CEO, said during a Nov. 3 earnings call the first production unit of the company’s Valkyrie drone will be handed over to the service “shortly,” as part of officials’ work to integrate components of the Air Force’s Skyborg system and payloads onto the aircraft.
Beyond Skyborg, the Air Force Research Laboratory has also been flying the drone under the Low-Cost Attritable Aircraft Technology program, and DeMarco said those “now are scheduled for delivery."
Broader production of the lot, DeMarco said, “remains on track” and may be accelerated depending on the look of the final fiscal year 2022 defense bills, as officials determine whether to “pull certain of these 12 to the left, completing them sooner if possible, in conjunction with our customers’ input.”
It’s still unclear how many aircraft from the first production lot the company is planning to deliver to the service. DeMarco said during a 2020 fourth-quarter earnings call that "it could be six to 10 this year," though he cautioned that it depends "on that customer dynamic."
Last week, he told analysts “we cannot talk about quantities yet,” potentially because of “national security reasons.” Kratos’ Valkyrie production line is in Oklahoma City, OK.
Kratos opted to internally fund the first lot last year ahead of an anticipated contract with the Air Force tied to the Skyborg program. That $37.7 million award was made in December 2020.
But for a potential second spiral lot, which DeMarco said could include another dozen aircraft, though he declined to share more information, the company’s plan “is absolutely not to go and produce [it] on 100% Kratos resources.”
That lot, he said, would be done “in close cooperation with our customers’ demand signals” and is expected to include funded contracts, as he pointed to, among other things, the possibility of Skyborg transitioning to a program of record in FY-23 -- a timeline an Air Force official warned reporters in August may not hold.
Steve Fendley, president of Kratos’ unmanned systems division, told Inside Defense Nov. 5 the company has “various levels of opportunity and commitment for the next production run of Valkyries,” including the Air Force and other potential customers.
“We are well-positioned with affordable defense systems in the unmanned arena as this is a growing focus in [the Defense Department] and obviously easier to fund than the mammoth programs,” he said.
A decision surrounding a second production lot, DeMarco said during the earnings call, likely wouldn’t come until the first or second quarter of the next calendar year and would largely be shaped by the FY-22 defense budget.
Beginning production of the next lot by the first half of 2022, Fendley noted separately, would “ensure that we can make timely deliveries on the upcoming contracts.”