The US-led air campaign in Iraq and Syria is proving a boon to weapons makers, sending their share prices soaring and bolstering political support for higher defense spending. The open-ended air war against the Islamic State group will mean billions in sales for bombs and missiles, spare parts for warplanes and a stronger case for funding sophisticated aircraft, including fighter jets, spy planes and refuelling tankers, analysts said.
"It's the perfect war from a defense contracting standpoint and a defense spending standpoint," Richard Aboulafia, vice president at the Teal Group consultancy, told AFP. Stock prices for the big defense contractors have been at record highs since President Barack Obama first sent military "advisers" to Iraq in June and continued to rise since air strikes started in August.
In the past three months, shares for Lockheed Martin are up 9.3 percent, shares for Raytheon rose 3.8 percent, Northrup Grumman's shares are up 3.8 percent and General Dynamic's share price jumped 4.3 percent. During the same period, Standard and Poor's index declined 2.2 percent.
Lockheed Martin makes the Hellfire missiles used by Reaper drones and by Iraqi government aircraft, and Washington has rushed the delivery of hundreds of the missiles to Baghdad. Only days after the United States extended the bombing raids into Syria last month, Raytheon won a $251 million contract to supply the US Navy with more Tomahawk cruise missiles.
On September 23, the first day of the air strikes in Syria, US warships fired 47 Tomahawk missiles, each of which costs about $1.4 million. Despite doubts about whether the air campaign will halt the advance of the IS militants, investor sentiment remains bullish on the defense companies, analysts said.