-A Transformative and Impactful Public Private Partnership-

By George A. Haloulakos, CFA, MBA


George A. Haloulakos, CFA, is a university instructor, author and entrepreneur. His published works utilize aviation as a teaching tool for Finance, Game Theory, History and Strategy.


The Northrop B-2 Spirit Stealth Bomber is one of the most transformative and impactful Public Private Partnerships (PPP) since the Apollo Manned Moon Mission. This article utilizes Finance to quantify the total economic impact of the B-2 in terms of ROI (Return on Investment). Contributions and spin-off benefits arising from or associated with the B-2 demonstrate how this game-changing capital asset has altered national defense policy, the political economy and military technology. The B-2’s multi-decade legacy bridging the 20th and 21st centuries casts a long shadow that warrants our appreciation in this unique economic reappraisal.

NOTE: This research article is based on the author’s longtime experience as a Special Situations Analyst (“Buy” side and “Sell” side), subject expert in Finance and later as a published author on military aviation. As such, insights offered here are largely based on primary research by the author supplemented by other authoritative sources listed in both the text and References section of this article.

This article is organized as follows: First, we present our observations derived from evaluating the total economic return on the B-2 Spirit that takes into account both quantitative and qualitative considerations. Second, is a review of basic Finance principles used in analyzing the B-2 Spirit as a capital asset deployed as a Public Private Partnership (PPP). Finally, we make the case on how the B-2 has been a transformative and impactful project in a variety of venues.


> As a Public Private Partnership, the B-2 Spirit generated economic added-value 3-times greater than its cost thereby yielding a net return 2-times the original investment. Concurrently, the jobs connected with the B-2 project created a 2.7 fold increase in employment. Such spending and employment multipliers are consistent with other historic aerospace capital projects, notably the Apollo manned mission.

> The B-2 Spirit was a game-changing asset in terms of national defense policy, resource management and the structure of military/aerospace industry. Northrop was transformed from a respectable company into a global brand while increasing in equity value by 5-fold in the 1981-2020 time frame.

> The changes in the aforementioned venues have altered the metrics used in evaluating the worthiness of military capital assets thereby impacting the public perceptions and/or appreciation of projects like the B-2 Spirit.

Production and deployment of the B-2 Spirit was a major technology driver for the US aerospace industry with further advances in computers, software, composite materials and precision guided munitions. Much like the Apollo manned spacecraft program of the 1960s, there were enormous spin-off benefits for civil, commercial and personal applications in new materials, telecommunications, medical technology, engineering, science and other such related areas.

One example is further advancement in computers associated with the design, development, testing, production and deployment of the B-2. Computer technology has been an integral part of America’s economic expansion since the early 1980s because of the enormous productivity that cascaded throughout the economy from increased computer applications in both the consumer and industrial sectors. Another example is how B-2 related design and development work has been a process driver for other major military and commercial aircraft programs. Due to its “flying wing” design, there were control and stabilization difficulties that required “fly by wire” and “computer generated artificial stability” technologies developed for the B-2 that were also transferrable to other aircraft that helped improve safety and operating efficiency.

How did these aforementioned “qualitative” benefits translate into added-value? Using Finance formulas developed from doing investment research and valuation of publicly traded military/aerospace companies, we can estimate added-value in terms of income/spending and employment.

> Income/Spending Multiplier
The income/spending multiplier is mathematically expressed as:
1 / (1-MPC), where MPC stands for Marginal Propensity to Consume (explained further in the ensuing paragraphs).
With the military/aerospace sector, the historic average MPC we have observed is 0.667. This yields an Income/Spending Multipier of 3.

This is arrived at by: 1 / (1-0.667) = 1 / 0.333 = 3

With the final cost of the B-2 program estimated at $45 billion, the implied added-value in terms of income/spending would be $135 billion. This is arrived at by multiplying ($45 billion) x 3 = $135 billion.
Since a 3x multiplier applied to a final cost of $45 billion yields gross added-value of $135 billion, this 3-fold increase translates into a Return on Investment (ROI) of 200% or a Net Added-value of $90 billion. This is arrived with a 2-step process.

Step 1: Calculating ROI in Decimal Form
ROI = [(Added-value) – (Final Cost)] / [Final Cost)]
ROI = [$135 billion – $45 billion] / [$45 billion]
ROI = [$90 billion] / [$45 billion]
ROI = 2.00

Step 2: Converting ROI into Percentage Form
An ROI of 2.00 translates into 200% (which is calculated by multiplying the decimal value x 100%, or (2.00) x (100%) = 200%

> Employment Multiplier
With the military/aerospace sector, the historic average employment multiplier we have observed is 2.7 times. In other words, for every 1,000 aerospace jobs created, this has the effect of generating an additional 2,700 jobs as part of the supply chain and/or infrastructure. In early 1987, the B-2 program as whole employed 40,000 workers throughout the USA. On this basis, and using the aforementioned 2.7 employment multiplier, this implies that the B-2 Spirit program created total employment of 108,000 workers. This is arrived at by multiplying (40,000) x (2.7) = 108,000

Moreover, these are high-income jobs. In the preceding section we noted that such jobs had a Marginal Propensity to Consume of 0.667 which means such workers on average would spend approximately 0.667 out of every one dollar (US$) thereby creating an income/spending multiplier of 3. Thus, we have quantified that the B-2 Spirit created a 3-fold return as measured by income and 2.7 times increase in employment. But these are just numbers. While they quantify added-value in Finance terms, we have also highlighted the corresponding qualitative benefits arising from the B-2 Spirit that have continued to yield forth positive returns by advancing the frontiers of knowledge and human progress in the same tradition associated with the Apollo manned moon mission of the 1960s. Estimating a monetary value for such benefits would further increase the added-value in Finance terms.

The B-2 Spirit dramatically altered the landscape for national defense policy, resource management and the military/aerospace industry structure. Its highly advanced technologies created a capital asset with significantly greater firepower, survivability and accuracy that meant fewer bomber aircraft were required versus previous generations that had hundreds and even thousands of such assets on alert.

> Stronger National Defense
The B-2 Spirit strategic bomber provides an unmatched combination of heavy payload, long range and stealth on a single platform. Moreover, since it is one of the most survivable aircraft in the world, the B-2 is able to fulfill the necessary tasks for a successful strike mission: surprise, suppression and evasion. This is because the B-2 is able to reduce detection with its low observable technologies coupled with composite materials and aerodynamic flying wing design that gives the aircraft the ability to penetrate complex, sophisticated adversary defenses. As such, this puts the adversary’s high-value, heavily defended targets at risk since the B-2 can reach any point in the world within hours.

Here are few metrics that affirm the aforementioned capabilities. The B-2 Spirit can fly at high subsonic speed and reach an altitude exceeding 50,000 feet. Its intercontinental range enables the aircraft to fly 6,000 nautical miles without refueling and 10,000 nautical miles with a single refueling. With a two-person crew (a pilot and mission commander), the B-2 can deliver a payload of 20 tons with pinpoint accuracy.

In sum, from a defense policy perspective, the aforementioned characteristics enables the B-2 to offer increased efficiency, firepower and flexibility versus prior generation bomber aircraft. This enables the US Air Force to fulfill strategic defense capabilities with fewer aircraft, thereby freeing up capital for other projects. The next section provides further clarification.

>Efficiency Gains in Resource/Asset Management
To fully appreciate how the B-2 Spirit has altered resource management, that, in turn, has affected both national defense and the political economy, it is worth reviewing how the advanced technologies of the B-2 have streamlined the resources required for combat missions. Our comparison will examine the number and type of aircraft required for Standard, Precision, Precision plus Stealth strike missions versus the B-2. In this comparison, Standard refers to conventional gravity bombs while Precision refers to laser guided bombs. Precision plus Stealth is the use of laser guided bombs with the Lockheed F-117 Nighthawk, a stealth attack aircraft that requires forward basing due to limited range (approximately 1,000 miles) and a much smaller payload versus a strategic bomber. The B-2 is Stealth, but unlike the F-117 has intercontinental range plus a very large payload.

Standard or conventional gravity bomb missions typically require 32 bombers (B-52 or B-1B), 16 escorts, 12 aircraft for suppression of adversary’s defenses and 12 refueling tankers. Precision strike missions require 16 bombers (B-1B or B-52), 16 escorts, 12 aircraft for suppression of adversary’s defenses and 11 refueling tankers. Precision plus Stealth uses 8 strike aircraft (F-117 Nighthawk) and 2 refueling tankers.

Note the numbers and use of different bomber aircraft to align the aircraft payload capabilities with the type of bomber weapons used for a strike mission. Also noteworthy is the absence of escort and suppression aircraft when Stealth is deployed.

In comparison, two B-2 Spirit stealth bombers can accomplish the SAME as each of these types of bomber groups described above! Since the B-2 has a significantly greater success rate in accuracy and survivability, this means fewer capital assets (human, physical and financial) are at risk while providing superior capabilities in projecting our nation’s firepower when needed. This staggering comparison is even more amazing when the B-2 combat record is examined with other US Air Force bomber aircraft whose service life intersected with the B-2. [Source: Beyond the “Bomber”: The New Long-Range Sensor-Shooter Aircraft and United States National Security – The Value of Stealth chapter. By Lt Gen David A. Deptula – USAF (Ret) 2015.]

> B-2 Achieves Higher Success / Lower Risk Combat Record
For our purposes of “comparable analysis” we have utilized strategic jet bomber aircraft whose service lives have intersected during the past 50+ years. In this comparison we have included the B-52, B-1B and FB-111 as each of these bomber aircraft have service lives that have either dovetailed or intersected with the service life of the B-2.

B-2 Combat Performance in 1999 Balkans War
(1) The B-2 destroyed one-third of all Serbian targets in the first eight weeks of the war with just six (6) B-2s making non-stop global flights from Missouri to the Balkans with refueling.
(2) Over the course of the war, the B-2 flew just 50 out of 34,000 (or less than 0.15%) of the total sorties by NATO (North Atlantic Treaty Organization) strike aircraft, but hit 11% of the targets, including a crucial bridge over the Danube River in Serbia that had stymied all other NATO strike aircraft for two weeks!

The B-2 posted greater operating efficiency versus the B-1B in this same venue while using an equal number of aircraft. By comparison, six (6) B-1B aircraft flew 2% of total NATO sorties (or 13-times more than the B-2) while dropping 20% of the ordnance. In other words, on an apples-to-apples basis,
an equal number of B-1B aircraft (six) had to fly roughly 6-times more sorties than six B-2 bombers to match the B-2’s combat record of hitting 11% of all targets. Yet, only the B-2 was able to hit the aforementioned crucial bridge over the Danube which had eluded all other NATO strike aircraft. thereby affirming the B-2’s efficiency advantage.

This is not meant to denigrate the B-1B, a most versatile and powerful strike aircraft, but rather to illustrate that the advanced technologies associated with the B-2 enable it to be more efficient because it is able to do more with fewer sorties at lower risk. The B-2 requires a two-person crew versus three for a B-1B. Therefore in the example given from the 1999 Balkans War, six B-2 bombers placed 12-crew members in combat while six B-1B bombers placed 18-crew members (or 50% more) in combat. This affirms not only a higher efficiency rate for the B-2, but lower attrition risk since fewer crew members are needed for a mission.

As of this writing, both the B-2 and B-1B have experienced zero combat losses. However the same cannot be said for the other bomber aircraft used in this comparision. The B-52 and FB-111 both experienced losses in combat with lower accuracy versus their aformentioned successors. While these two bombers performed admirably in high-profile missions, their success was tempered by the loss of aircraft and combat personnel. This provided the incentive for further advancement in technologies to increase the success rate while lowering the attrition risk to both aircraft and crew. The outcome was development and deployment of the B-1B (initial operating capability reached in 1986) and the B-2 (1997). But before these advanced aircraft could be deployed, the B-52 and FB-111 shouldered the burden of long-range strike missions that carried high attrition risk. Two such long-range strategic bombing missions are given as examples for this paper in which these aircraft were essentially the “tip of the spear.”

Operation Linebacker II (US Christmas Bombing vs Vietnam 1972)
For eleven days, 207 B-52 bombers launched continuous aerial bombings on North Vietnam. While this mission led to resumption of eventual settlement talks, 16 B-52 bombers (each carrying a crew of 6) were shot down by the enemy for an aircraft loss rate of 7.7%.

Operation El Dorado Canyon (US Airstrike vs Libya 1986)
This strike mission featured 18 FB-111 bombers (each carrying a crew of 2). Nine (9) of the 18 FB-111s (or 50%) released their ordnance on target. One FB-111 was shot down by the enemy for an aircraft loss rate of 5.6%.

As a reminder that it is the portfolio or mix of different types of aircraft that generates the highest probability of successful, accurate strikes with the least risk (the central theme of my book CALL TO GLORY), it is worth noting that in Operation Desert Storm (1991), B-52s flew 1,620 sorties while delivering 40% of the weapons dropped by coalition forces and with zero combat losses. The FB-111 strategic bomber was not used in Operation Desert Storm but two variants of the airframe, the F-111E and F-111F, were deployed with great success. The tactical F-111 variants were credited with delivering approximately 80% of the war’s laser-guided bombs and destroying over 1,500 enemy tanks and armored vehicles. As part of a mixed force, the F-111 variants had zero combat losses.

> Northrop: Transformed From Respectable Company to Industry Leader
Although just 21 B-2 aircraft were built, thereby implying a unit cost of $2.1 billion, the enormous success of this capital project transformed Northrop – the primary contractor – from a solid, respectable company in the military/aerospace sector to an iconic global industry brand. Moreover, it helped to fulfill the potential as envisioned by its legendary founder, Jack Northrop. Financially, Northrop’s industry reputation was based on its success as a manufacturer of light-weight, economical fighter aircraft (notably the T-38 and F-5) which for decades have served as trainers as well as assets sold to overseas US allies while also used by the US Air Force and US Marine Corps. Northrop’s legacy as an innovator in aerodynamic design can be traced directly to its entrepreneurial founder, Jack Northrop, who created the flying wing that would eventually become the company’s global brand identity. Beginning in 1929 with the Avion Experimental #1 and continuing throughout the 1940s with the N-M9 Flying Wing, XP-79B Flying Ram, XB-35, YB-49 and the YB-35, Northrop laid the foundation for what would become the B-2.

Since the flying wing concept was based largely on intuition rather than analytics, the early pioneering variants of this design relied on very skilled test pilots to make it work. By the 1980s computer and fly by wire technologies were developed to resolve control and stabilization issues that plagued the early variants. This transformed the flying wing from a novelty into a formidable combat asset. As a technology driver, the B-2 not only changed the role of the strategic bomber but its technical advancement elevated Northrop into an industry leader. The financial success of the B-2 Spirit as a Public Private Partnership enabled Northrop Corporation to acquire the Grumman Corporation in 1994, thereby becoming Northrop Grumman Corporation.

Despite the inherent cyclical nature of the military/aerospace industry and its eventual consolidation, the success of the B-2 Spirit and its accompanying synergy not only enabled Northrop to acquire Grumman, but achieve a very successful investment record as a publicly traded company. Beginning with 1981, when Northrop was officially awarded the contract to build the B-2, and the ensuing four decades ending in 2020, the stock increased in value by 5-fold from $61 to $305. This investment record, driven in large part by the success of the B-2, appears poised for even higher flight as Northrop Grumman was selected as the prime contractor for the B-21 Raider, the next generation stealth bomber! [Sources: Northrop Grumman Public Company Documents and]

The financial and operating success of the B-2 Spirit had a further significant effect in terms of how very large scale military capital projects are evaluated. Earlier we quantified how the B-2 has superior accuracy and survivability versus prior generation strategic bomber aircraft, thereby translating into lower risk and greater efficiency. This has created a seismic shift in how such capital assets are valued and deployed. Prior generations of bomber aircraft were built in much larger quantities to fulfill various global mission requirements while allowing a wide measure of error for attrition risk.

Here is how the production numbers of the bomber aircraft cited in this paper compare: 744 B-52s, 76 FB-111s, 100 B-1Bs and 21 B-2s. Of these bomber aircraft, the estimated number currently in service as of this writing are: 58 B-52s, 45 B-1Bs and 20 B-2s. The FB-111 was retired in the early 1990s.

Historically, the standard metric for evaluating such aircraft is operational readiness or mission capability rates. As a practical matter, simpler or less technically complex aircraft have lower maintenance. Lower maintenance requirements tend to create higher readiness or capability rates. Although the last B-52 was produced in 1962, there have been several capital upgrades that have extended the life of the airframe while enabling it to remain at a higher mission capability rate versus the B-1B and B-2. Latest published mission capable rates have the B-52 at 65.73% versus 46.42% for the B-1B and 60.47% for the B-2.

Applying these mission capable rates to the aforementioned aircraft fleets currently in service, implies that 38 out of the 58 B-52 bombers are available for immediate deployment versus 21 B-1Bs out of 45 and 12 B-2s out of 20. While the B-52 does not have the same low-level capability as the variable, swing-wing B-1B nor the stealth of the B-2, its utilitarian airframe has enabled the B-52 to remain a valuable asset because of its relatively higher operational readiness rate and its adaptability into a stand-off, long-range platform for missiles, drones and electronic countermeasures plus other varied roles such as maritime surveillance. The universal acceptance of the mission capable rate metric has continued to be a major reason for the B-52 remaining in active service.

In the case of the B-1B, its noticeably lower operational readiness can be attributed to excessive wear-and-tear associated with its ongoing long-range missions in the War on Terror since the early 2000s. The B-2, an inherently more complex aircraft than either the B-52 or the B-1B, has the second best mission capable rate among the trio of strategic jet bombers. However, due to its significantly higher survivability and accuracy, the strict application of this metric is less meaningful due to its stealth capability.

Earlier we quantified how two (2) B-2 bombers were capable of fulfilling the same missions that would otherwise require 8-to-16 times more bomber aircraft (16 to 32 B-52s or B-1Bs, respectively, for conventional gravity bomb and precision strike missions). This staggering comparison reflects the higher survivability and accuracy associated with the B-2’s stealth. Thus while the mission capable rate is important in evaluating the value of a long-range strike aircraft, it is far less meaningful in the “Age of Stealth” since fewer aircraft are required.

The current operational readiness of the B-2 means that 12 such aircraft (out of 20) are immediately available for combat. Yet it is unlikely that all aircraft would be needed simultaneously as the B-2s historically have met or exceeded expectations versus all prior generation strategic bombers while involving no more than 10% to 30% of the B-2 fleet in any given mission.

Here are three examples. In 1999 during the Balkans War, six (6) B-2s flew non-stop from Missouri to Yugoslavia (and back) while recording the highest efficiency including destroying high-value targets that had eluded all other strike aircraft. During the War on Terror in March 2011, two (2) B-2s were involved with Operation Odyssey Dawn to enforce the “no-fly” zone in Libya. In January 2017, two (2) B-2s attacked the adversary’s training camp in Libya. In each of these examples, less than one-third of the B-2 fleet was required for combat, while still having a respectable 60.47% operational readiness! Moreover, since the B-2s, like all other aircraft, have a series of specific missions that are carried out as part of a “mixed” force, this also underscores the likelihood of not having to actively use all B-2s at once. In sum, the B-2’s stealth makes the mission capable rate metric less relevant versus prior eras in which much larger bomber fleets with higher operational readiness were needed. The B-2’s stealth gives it higher survivability and accuracy, thereby negating the need for vastly larger aircraft fleets whose vast size was the margin of error due to higher attrition (i.e., higher risk to aircraft and crew).

While the mission capable rate is less relevant when evaluating the B-2 as a capital asset, a key or immutable factor in making the B-2 valuable is the extended useful life of the airframe. The longer an asset is in active use, the higher its Return on Investment. Given the enormous costs associated with designing, developing and producing an airframe, a longer useful life means costs can be spread over a longer time period. The transcendent if not transformative nature of the B-2 stealth bomber has made this aircraft a fungible asset (i.e., transferrable from one generation to the next) thereby enabling it to remain a frontline, go-to weapon now entering its fourth decade of service! Given that Northrop Grumman was selected as the prime contractor for the next generation stealth bomber, the B-21 Raider, it can be inferred that the accumulated experience and investment associated with the B-2 was the foundation for this contract. In other words, an imputed or implied added return on investment (in the form of a new capital project) has been derived from the B-2, which helps to make comparable future stealth projects equally if not more financially successful.

We have shown that from 1981-2020 the Northrop B-2 Spirit as a Public Private Partnership has been an economic powerhouse as measured by Income, Employment and Return on Investment while being a major technology driver across a wide number of venues. The combat success of the B-2 as measured by accuracy, survivability and efficiency has altered national defense policy in terms of resource management and strategy. All of this helped elevate Northrop into a global industry leader while increasing its equity value by 5-fold in terms of stock price. This is not to suggest it has been a smooth, easy path especially with an industry known for prolonged economic cycles. To be sure there were numerous challenges to overcome and setbacks along the way. Much has been written about those challenges by others and we would commend the reader to review the many articles and books to get a detailed account on such matters. Our purpose here has been to utilize Finance – which explains how capital is employed to create added-value and is the language of business – to gain insight and develop context for evaluating very large military capital projects like the B-2 Spirit. We see the B-2 as not only a viable if not invaluable national security asset but a technology driver that has helped advance the future.

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Deptula, David A. Lt Gen – USAF (Ret). Beyond the “Bomber”: The New Long-Range Sensor-Shooter Aircraft and United States National Security – The Value of Stealth chapter. 2015.

Dornan, Robert K. Former US Representative (California). 1977-1983, 27th Congressional District; 1985-1993, 38th Congressional District; 1993-1997, 46th Congressional District. Telephone interviews (December 24, 2013 and January 20, 2014) on B-52, B-58, B-1B, FB-111 and B-2 strike aircraft.

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Haloulakos, George A. (CFA Charterholder). CALL TO GLORY – How the Convair B-58 Hustler Helped Win the Cold War. ISBN: 9780692475454. UC San Diego Bookstore Publishing. 2015.

Haloulakos, George A. (CFA Charterholder). “The B-52 Stratofortress: The ACE of Heavy Bombers.” BUF BULLETIN. Vol. 22 – No. 4 – Issue 82. Fall 2014.

Haloulakos, George A. (CFA Charterholder). HIGH FLIGHT – Aviation as a Teaching Tool for Finance, Strategy and American Exceptionalism. ISBN: 9780100727380. UC San Diego Bookstore Publishing. 2014.

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Westwick, Peter Dr. STEALTH: The Secret Contest to Invent Invisible Aircraft. Oxford University Press (New York). 2020.

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