Kratos Defense and Security Solutions has started building production examples of its XQ-58A Valkyrie attritable unmanned air vehicle (UAV), despite an investigation into an October 2019 mishap which delayed an expected contract from the US Air Force (USAF).

The company had expected the USAF to grant it a production contract within 90 days of the start of FY2020, which for the US government begins 1 October 2019. That funding was delayed as the US Department of Defense (DoD) investigated an “anomaly” that caused the UAV to be damaged on landing after its third test flight in the fall, the company says in an earnings call on 25 February.

US Air Force Research Labratory XQ-58A Valkyrie demonstrator - 2

Source: US Air Force Research Laboratory

US Air Force Research Laboratory XQ-58A Valkyrie demonstrator

“This resolved [parachute] recovery system situation and related now complete customer investigation resulted in delays that have pushed Kratos’ previous Valkyrie expectation and programme plan approximately six months to the right,” says Eric DeMarco, president and chief executive officer of Kratos Defense, in the earnings call.

The XQ-58A returned successfully to flight in a fourth test in January 2020.

Nonetheless, the USAF contract was to be an important part of Kratos Defense’s 2020 revenue and the stock market reacted negatively to the news, with the company’s stock price falling by more than 22% to $15 a share on 26 February.

Kratos remains bullish on the production potential for the XQ-58A, which is continuing flight tests as a technology demonstrator with the US Air Force Research Laboratory. The company has started production of the UAV, using its own cash, at its Oklahoma City, Oklahoma facilities ahead of receiving a USAF contract.

“We expect an initial Valkyrie related production system and payload integration award sometime in the current months as we complete the process to work the details with the [USAF] stakeholders,” says DeMarco. “This is just one of several Valkyrie related opportunities we are currently pursuing, including one with an entity, where we are currently forecasting orders for a total of approximately 30 XQ-58 drones within the next 18 months.”

He did not disclose what other US defense services or entities are interested in the UAV.

The company plans to start delivery of the first 12 production examples of the Valkyrie in the first quarter of 2021, and aims to deliver one or two per month every month thereafter that.

“We are leaning forward here, ahead of the expected contract awards as we are highly confident that receipt of initial Valkyrie production contracts is not if, but when based on the most recent information that we have,” says DeMarco.

DeMarco says the USAF remains enthusiastic about the Valkyrie as a loyal wingman to manned fighter aircraft. He notes the service’s plans to fly the UAV in an exercise with the Lockheed Martin F-35 and the Lockheed Martin F-22 in the first half of 2020. The Valkyrie is also a candidate for the USAF’s top unfunded priority, the Skyborg programme, an effort to develop artificially intelligence software to control a loyal wingman UAV, he says.