(AP Photo/Tsafrir Abayov, File)
- President Biden requested an additional $106 billion to the DoD budget, citing the Israel-Hamas war and other global conflicts.
- The CEO of military contractor RTX said Tuesday the company could "benefit" from an increased DoD budget.
- RTX Corporation, formerly known as Raytheon, is a long-time US defense contractor which has worked on supplying Israel's Iron Dome since 2014.
On an October 24 earnings call, RTX Corporation CEO Greg Hayes said that the defense contractor stood to "benefit" from a US Department of Defense's budget increase which would fund the supply of weapons to Israel and the restocking of weapons in Ukraine.
"I think really across the entire Raytheon portfolio, you're going to see a benefit of this restocking," Hayes said on the call. "On top of what we think is going to be an increase in DOD top line."
The statement was in response to a question from Kristine Liwag, an analyst from Morgan Stanley. Liwag asked how quickly RTX Corporation, formerly known as Raytheon Corporation, could profit if Congress approves President Biden's request for a DoD budget increase in 2024.
"Looking at this request, you've got equipment for Ukraine, air and missile defense for Israel, and replenishment of stockpile for both," Liwang said. "And this seems to fit quite nicely with the Raytheon Defense portfolio."
Representatives for Morgan Stanley did not return Insider's request for comment. A representative for RTX Corporation declined to comment, but pointed Insider to Hayes's October 24 CNBC interview, in which he said there is "very strong demand" for RTX products from Israel, the US, and "other partner countries around the world."
"The war in Gaza or in Israel, again, a tragic situation — it will eventually lead to additional orders, most likely," Hayes said. "Our focus right now is how do we support the Israeli Defense Force? How do we make sure that they have what they need to be able to defend their country."
Since 2014, RTX Corporation has been working with Israeli company Rafael Advanced Defense Systems to help produce Israel's Iron Dome, which detects and shoots down incoming rockets. The DoD has been funding the Iron Dome since 2011, a few years after Israel first began to deploy it in 2007.
Shortly after Biden visited Israel on October 18, Biden posted a video address from the Oval Office, requesting an additional $106 billion to fund US military aid to Israel and Ukraine, and to bolster US troops along the southern border. He called the budget request "a smart investment" in American security and emphasized the need to support Israel's Iron Dome.
Biden's $106 billion supplemental budget request can't be approved until the Republican Party elects a Speaker of the House, following Kevin McCarthy's ouster from the position several weeks ago. Failure to approve a new federal budget by November 17 could lead to a government shutdown, resulting in a halt in all payments to federal workers, contractors, and members of the military.
National Security Advisor Jake Sullivan said in an October 20 press release that the US has already given Israel "interceptor rockets" to support its Iron Dome missile defense system following the October 7 attack from Hamas.
In 2020, RTX Corporation and Rafael Advanced Defense Systems partnered to create the joint-venture "Rafael USA," a US-based company that produces both the missile interceptors and launchers that make up Israel's Iron Dome Weapon System, and a new "U.S. derivative" of the weapons called SkyHunter.
"This will be the first Iron Dome all-up-round facility outside of Israel, and it will help the U.S. Department of Defense and allies across the globe obtain the system for defense of their service members and critical infrastructure," Sam Deneke, RTX's vice president of land warfare and air defense business execution, said in a press release when the partnership was announced.
The RTX Corporation earnings call also reported that the company anticipated its 2023 adjusted sales to be about $74.0 billion, which it says is "up from $73.0 - $74.0 billion" compared to last year.
Following an October 7 attack by Hamas militants into southern Israel, an estimated 1,400 Israelis have died, and more than 200 people have been taken as hostages into Gaza. Following the attack, Israel began a series of air strikes that have killed an estimated 5,000 people in Gaza, including about 2,000 children, according to Gaza's health ministry.
Israel, which controls almost all of Gaza's utility access, also cut off its electricity and water access following the Hamas attack and hardened its 16-year blockade on the territory. This prevented any food, water, and medical supplies from entering Gaza until this week, when small convoys of trucks were allowed to begin bringing aid through the Rafah crossing bordering Egypt.