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Low prices mean high sales volume means high profits. So what does this tell us about overpriced warplanes?
Fighter Jet Picture
In the 21st century, there are fighter jets, and then there are fighter jets. The rate you get depends on how much you want to pay.
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Do you have hundreds of millions of dollars to spend? Then, like the US government, you can hire Lockheed Martin (LMT 0.58%) to design and build an F-22 Raptor stealth fighter, widely considered the world's most capable air superiority fighter. (Of course, if production is curtailed before economies of scale kick in, the planes will end up costing $412 million each.)
Alternatively, that same money will buy you a handful of perfectly serviceable fourth-generation F/A-18 or F-15 fighter jets from Boeing (BA -0.10%) at a retail price of about $100 million each.
Shopping on a budget? Maybe you like a Soviet-era Sukhoi Su-34 "Fullback". (list price: $18 million). Or if you prefer to buy domestically, Textron's (TXT 1.89%) new Scorpion is a bargain at $17 million per plane.
Depending on a nation's needs, different buyers choose different warplanes and different prices. But what are the most popular combinations
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10. Chengdu J-7 Fishbed (no longer in production) China's J-7 fighter jet makes its first appearance at No. 10 in this year's Flightglobal Insight "World Air Forces 2015" report. It is actually the Chinese version of the old Soviet MiG-21 and is no longer produced. However, 418 remain in service, giving the fighter a global market share of 3%.
The export version of the Chinese J-7 is called the F-7, and it is also a twin of the Russian MiG-21. F-7 numbers have not suffered any wear in the last 12 months. A year ago, 460 were in service worldwide. Today, everyone is still flying, giving the F-7 a 3% market share as well.
8. Northrop Grumman F-5 Tiger - List price: $20-25 million (estimate) After two dozen retirements last year, only 468 Northrop F-5 Tigers are still flying. The aircraft is no longer in production, but retains a 3% market share. The website AircraftCompare.com estimates that if the Tiger were produced today, it would likely cost somewhere in the $20 million range.
Russia's answer to the US A-10 Thunderbolt II "Warthog", the Su-25 is a dedicated "tank destroyer" aircraft. It's also apparently almost as popular as the Warthog. In the last year, only one Su-25 has been retired.
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With 506 aircraft still in service, it also has a 3% market share. With a new variant currently in production, the Su-39, the Frogfoot may rise higher in future rankings.
Although once one of the most popular fighter jets in the world, it is no longer in active production and the number of MiG-21s in service continues to decline. Its workforce has fallen from 793 in 2013, to 698 in 2014, to just 668 today. Since it's no longer produced, it's hard to say how much a new one might cost...but it looks like you can buy a used MiG-21 on eBay for around $25,000.
The MiG-21 still has a 5% market share. And if you add up all their "twins" - the Chinese J-7s and F-7s that still fly - there would be 1,546 MiG-21s in service and their market share would double.
5. Mikoyan-Gurevich MiG-29 Fulcrum -- List price: $40 million Moscow's most advanced MiG has seen its market share drop to 5% (793 aircraft). This is enough to drop the MiGs to fifth place in the standings. However, a new variant (MiG-35D) is expected to enter service in 2016 and may improve the MiG's prospects, so stay tuned.
Lockheed Martin F 22 Raptor
4. Boeing F-15 Eagle - List price: $100 million Losing more and more international fighter competitions due to high cost and poor stealth, the Boeing F-15 fell a notch in the rankings this year and now ranks fourth on Flightglobal's list. With 11 fewer aircraft in service (now 854 total), the F-15 is tied for a 6% global market share with…
3. Sukhoi Su-27 Flanker - List price: $22 million Russia's most popular fighter jet, the Su-27 Flanker, has continued to climb the rankings this year, and one of the reasons may be its low cost "Helped" by a falling ruble, the most advanced model of the Su-27, called the Su-35 Flanker-E, costs just $22 million each, according to military aircraft experts at deagel.com.
Rising two places from fifth place last year, the basic Flanker and its Su-30, -33 and -35 cousins now control a 6% global market share, with 874 aircraft worldwide fully in service.
Likewise, maintaining its No. 2 position in the market, Boeing's F-18 fighter jet, in its many iterations, has a 7% market share worldwide. In 2015, the population of F-18 fighter jets in the world's air force grew to 1,046 aircraft in service.
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And last (first?) but not least, for the second year in a row, Lockheed Martin's modestly priced F-16 Falcon topped the charts in this year's edition of Flightglobal's report. With 2,242 aircraft in active service, the F-16 remains the most popular fighter jet on the planet, representing 15% of the world's air force.
Why Fighter Jets Matter to Investors So why is the defense industry important to investors? It works like this: The more aircraft a company builds and sells, the broader the basis on which it can allocate research and development costs, and the less it can charge per aircraft.
Are you with me so far? Today, Lockheed Martin has sold more than 4,500 F-16s worldwide. It is not surprising. After all, it is one of the most cost-effective combat aircraft in our inventory. (Note also that Russia sold even more of its even cheaper MiG-21s.)
Half of Lockheed's F-16s still fly and generate service, maintenance and upgrade revenue for Lockheed, earning their shareholders 11% profit margins on that revenue.
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However, the aircraft that Lockheed hopes will become the F-16's successor, the F-35 stealth fighter, costs more than three times as much as an F-16. In fact, some versions of the F-35 could cost nearly five times as much as an F-16. At prices as high as $150 million for example, the question becomes: Can Lockheed Martin maintain its global market dominance in the face of much cheaper fighter offerings from Russia and China?
Personally, I have doubts. Of course, if all goes according to plan and Lockheed Martin manages to sell more than 3,000 of its F-35s over the next 60 years, the plane's current high price could generate a lot of profit for Lockheed. But if Lockheed doesn't sell them fast enough and lower the price fast enough to attract buyers, one day soon this top 10 of the world's most popular fighter jets will look very different.
Rich Smith owns no stock or owns any of the companies listed above. You can find him on CAPS, publicly pontificating as TMFDitty, where he is currently ranked #359 out of over 75,000 ranked members. The Motley Fool recommends and has stock on eBay. We may not all have the same opinions, but we all believe that considering a wide range of ideas makes us better investors. The Motley Fool has a disclosure policy.
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How F 15s Work
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Invest better with The Motley Fool. Get stock recommendations, portfolio advice and more with The Motley Fool's premium services. The F15 is a small jet aircraft designed for combat in all weather conditions. Stocktrek/Getty Images
It didn't take long for the world to realize the combat potential of airplanes. In 1911, just eight years after the Wright brothers launched their creation, the US military began dropping test bombs from above. A few years later, World War I troops were fighting in the skies with fighter planes equipped with machine guns.
From there, things moved pretty quickly. Just 60 years later, the first single-engine propeller planes had evolved into sleek, powerful fighter jets that could perform tight aerial turns at over 600 miles per hour (970 km/h).
Fighter Jet Photos, Download Free Fighter Jet Stock Photos & Hd Images
In this article, we will take a look at one of the most famous fighters, the F-15. This extraordinary plane has been in the making for years, it has already existed
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