April 23 (Bloomberg) -- Northrop Grumman Corp., winner of a $3.74 billion contest to build unmanned spy-planes for the U.S. Navy, may find the order leads to more sales overseas.

The Australian government had included its requirements for an unmanned surveillance aircraft in the contest and will decide by year-end whether to buy the Northrop plane, Captain Robert Dishman, the U.S. Navy's program manager, said at the Pentagon in Washington yesterday. The Navy has also had informal talks with the U.K., Canada, Singapore and Japan, he said.

``It's very good news for Northrop,'' Myles Walton, an Oppenheimer & Co. analyst in Boston, said in an interview yesterday. ``It's an important step toward locking up the unclassified market for unmanned air vehicles.''

Los Angeles-based Northrop's Global Hawk drone, which is already flown by the Air Force in Iraq and Afghanistan, yesterday beat separate offers by Boeing Co. and Lockheed Martin Corp for the Navy order to build as many as 68 aircraft. The initial $1.16 billion development contract runs through September 2014 and the total program may reach $3.74 billion.

The Navy's unmanned Broad Area Maritime Surveillance plane will be used to try to detect and track threats to the fleet. The aircraft will operate around the clock from five bases worldwide.

The victory extends Northrop's lead in unpiloted planes over Lockheed and Boeing, which dominate manned military aircraft. Northrop's $5.7 billion Global Hawk order from the Air Force is already the U.S. military's largest drone program. During the 2003 invasion of Iraq, the aircraft supplied 55 percent of the target data used to destroy air defenses while flying only 5 percent of the surveillance missions.

Surveillance Missions

As part of the development contract, Northrop will provide two unmanned aircraft with payloads, communication equipment and two mission control systems. The Navy wants the new planes in service by 2015 and to be used at five locations by 2019, Dishman said. The Navy plans to keep the planes in service for about 20 years, he said.

``It's a highly capable air vehicle,'' the Navy's Dishman said of Global Hawk. He declined to provide a comparison to the other bidders.

Global Hawk has recorded more than 15,700 combat hours in Iraq and Afghanistan. Powered by a single Rolls-Royce Group Plc engine, its cruising speed averages 310 knots.

Northrop is the third-largest U.S. military contractor, after Bethesda, Maryland-based Lockheed and Chicago-based Boeing. Northrop fell 2.1 percent to $69.56 yesterday in New York Stock Exchange composite trading before the announcement. Lockheed dropped 2.6 percent to $103.79, while Boeing declined 0.7 percent to $78.56.

Earnings Impact

The Navy contract may increase Northrop's earnings per share by 10 cents, or 1.4 percent, in 2011 from the $7.22 predicted without the contract, Oppenheimer's Walton said. He rates Northrop's shares ``outperform'' and doesn't own any. The win may also lift the shares by $1, he said.

Boeing and Lockheed both said yesterday they hadn't been briefed by the Navy on the reasons for their loss to Northrop.

Boeing's loss is its second recent defeat by Northrop after a February Air Force competition for refueling tankers. Northrop and partner European Aeronautic Defense & Space Co., the parent of Airbus SAS, won the $35 billion program by offering a larger jet with more fuel capacity. Boeing is protesting that decision to the U.S. Government Accountability Office.

For its Navy bid, Lockheed had joined with closely held General Atomics Aeronautical Systems Inc. of San Diego to modify the Predator drone, which has recorded more than 296,000 combat hours. The modified version offered to the Navy was called the Mariner and featured an 88-foot wingspan and a maximum altitude of 50,000 feet.

To contact the reporter on this story: Edmond Lococo in Boston at elococo@bloomberg.net; Gopal Ratnam in Washington at gratnam1@bloomberg.net.

Last Updated: April 22, 2008 20:34 EDT