WASHINGTON Lockheed Martin Corp (LMT.N) plans to double its sales of flight simulators and services for commercial jetliner pilot training to about $220 million a year in three to five years, a senior official said on Tuesday.
The growth is part of an effort to increase sales at the Pentagon's largest defense contractor, helping offset declines in sales of military equipment under U.S. budget cuts and sequestration, said Dale Bennett, executive vice president of Lockheed Martin's Mission Systems and Training unit, speaking at the Reuters Aerospace and Defense Summit.
"It's a very interesting market in that there are few players, so we think there's room for more competition," Bennett said, noting that the training business has relatively high margins.
Among the competitors are CAE Inc (CAE.TO) of Canada and FlightSafety International, which is owned by Berkshire Hathaway Inc (BRKa.N).
Lockheed Martin has long provided simulators and training for military jet fighters. But its civil aviation simulator sales have grown to about $110 million annually after it acquired Sim-Industries of the Netherlands in 2011.
The Dutch company, which makes full-motion flight simulators, is "small, innovative and agile" and is stirring change at Lockheed, Bennett said. The company provides simulators for Boeing Co's (BA.N) 737 and Airbus's EAD.PA A320 jets, the best-selling jets of both companies. The Lockheed unit produced $110 million in revenue in 2012, Bennett said.
"It's not going to be a multibillion-dollar franchise, but more in the hundreds of millions" with "reasonable returns" on capital, he said.
(Reporting by Alwyn Scott; Additional reporting by Paige Gance; Editing by Gerald E. McCormick; For other news from Reuters Aerospace and Defense Summit, click on www.reuters.com/summit/Aero13; At bottom of text, must include; Follow Reuters Summits on Twitter @Reuters_Summits; )