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Kratos to Help Air Force Develop Unmanned Aircraft

Kratos Defense & Security Solutions Inc. said on July 11 that it will help the Air Force Research Laboratory develop an unmanned aircraft called the Low-Cost Attritable Strike Unmanned Aerial System Demonstration aircraft, abbreviated as LCASD.

Kratos (Nasdaq: KTOS) said it will receive $7.3 million in government funding and will invest up to $33.5 million of its own funds in the project, which is expected to last three years. There is a chance that more government funding could follow, Kratos said.

Under the award, Kratos said it will design, develop, deliver, demonstrate and test a technical baseline for a high-speed, long-range, low-cost, limited-life strike unmanned aircraft. In return for its investment, Kratos would get to retain aircraft, related support equipment, intellectual property, software, data, platform and system rights.

The Air Force is asking for an aircraft that costs less than $3 million apiece. If production goes higher than 99 units, the Air Force wants a price tag of $2 million or less.

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The Air Force wants an aircraft able to make a dash at 0.9 times the speed of sound, able to conduct flights of 1,500 nautical miles and able to carry a pair of 250-pound bombs. The Air Force said it would prefer its contractor use commercial off-the-shelf components if possible.

Shares of Kratos touched a two-month high point on July 11, the day of the announcement. By midday, they had risen more than 13 percent to $4.82.

“The potential multiple year revenue, profitability and cash flow opportunity of this program and platform is significant, and Kratos’ winning approach and technology resulted in success for this highly competed contract award,” said Eric DeMarco, CEO of Kratos Defense, in a prepared statement.

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