“Interceptors” was the buzzword on nobody’s lips a week ago. Now, aircraft and missiles that can neutralise incoming attacks rank high on the list of most desirable bits of military kit. Gulf states are running through their stockpiles in an effort to destroy Iranian missiles and drones. Big US defence companies such as Lockheed Martin, Raytheon and L3Harris have every incentive to produce more. Start-ups too could get in on the action.
As well as being a scarce commodity, interceptors are expensive to produce. Top-of-the-range Patriot missiles can cost up to $4mn. But they are also pricey in relative terms, now costing something like 100 times as much as the Iranian-made Shahed drones they are deployed to destroy.
Defence manufacturers should be keen to sell as much of this equipment as they can. The business segment in which Lockheed Martin’s PAC-3 interceptors sit makes up one fifth of overall revenue, with an operating margin that is 3.5 percentage points fatter than the group’s average.