--- title: "Kratos is building a drone line for 35-40 aircraft a year. Its order book is four." description: "Kratos is ramping the Valkyrie toward 35-40 aircraft a year on an order book of four Marine jets, and the next tranche waits on a fiscal 2027 appropriations vote." publisher: "The Inference" section: "Robotics & Defense" published: 2026-10-21T17:09:11.624Z modified: 2026-10-21T17:09:11.624Z canonical: https://theinference.org/article/kratos-is-building-a-drone-line-for-35-40-aircraft-a-year-its-order-book-is-four language: en keywords: "Defense, Drones, Manufacturing, Kratos Defense" --- # Kratos is building a drone line for 35-40 aircraft a year. Its order book is four. > Kratos is ramping the Valkyrie toward 35-40 aircraft a year on an order book of four Marine jets, and the next tranche waits on a fiscal 2027 appropriations vote. [Kratos](https://theinference.org/markets/companies/kratos-defense) is ramping a drone production line toward 35 to 40 aircraft a year while its only signed order is four planes, and shareholders are paying for that gap in advance [1]. The stock's slide to a 52-week low of $39.79 on October 14 is the market pricing the order book, not the factory [5]. ## The ramp is sized for an order that has not arrived [The Aviation Week teardown published on October 21](https://aviationweek.com/defense/supply-chain/long-term-bets-near-payoff-acquisitive-kratos) is the first place Kratos's ramp and its orders sit together [1]. The XQ-58A Valkyrie, a low-cost uncrewed jet meant to fly alongside crewed fighters, was rescued by the Marine Corps after the Air Force walked away in 2021 [1]. Kratos shipped about eight aircraft in 2025; production is projected at 18 a year in 2027 and 35 to 40 in 2028, out of an Oklahoma City plant that already turns out about 150 target drones and Valkyries a year on one common avionics suite [1]. The Marines signed for four MQ-58s through [Northrop Grumman](https://theinference.org/markets/companies/northrop-grumman) for $231.5 million and has committed to nothing beyond the first batch [1]. The fiscal 2027 appropriations bill carries a $1.3 billion Navy request for collaborative combat aircraft; if it passes as requested, the ramp has a buyer, and interest from Germany, where Kratos teamed with Airbus on [a Valkyrie variant that flew in Europe this month](https://theinference.org/article/kratos-and-airbus-flew-the-valkyrie-in-europe-kratos-says-it-can-build-10-000-engines-a-year-with-no-buyer), widens the book [1][4]. ![Kratos XQ-58A Valkyrie mockup on display at the ILA air show in Berlin in June 2026](https://storage.googleapis.com/theinference-public/img/eef433e68a5a5410.jpg) *The Kratos XQ-58A Valkyrie displayed at the ILA air show in Berlin in June 2026, where Kratos is pursuing a German order with Airbus. (André Gerwing)* If it does not, Kratos owns a line sized for an order that never arrived, and the shareholders who funded the buildout absorb it. ## The cash flow shows who is carrying the bet Kratos has burned cash in nine of the last ten quarters while [quarterly revenue grew from about $277 million to $459 million](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001069258), and 2025 revenue reached about $1.35 billion [1][6]. Hypersonics, $200 million of sales in 2025 on the Pentagon's Multi-Service Advanced Capability Hypersonic Test Bed program, is projected to pass $700 million in 2027, and the Indiana arc-jet and radar facilities Kratos [broke ground on October 14](https://defence-industry.eu/kratos-begins-construction-of-indiana-facilities-for-navy-an-spy-1-radar-sustainment-and-hypersonic-materials-testing/) extend that capacity with $35 million of Department of War money [1][2]. *Chart: **Revenue is up 66% in two years, but free cash flow was negative in nine of ten quarters** Line chart of Kratos quarterly revenue and free cash flow from Q1 2024 to Q2 2026, showing revenue climbing from $277 million to $459 million while free cash flow stayed negative in nine of ten quarters* *Kratos quarterly revenue and free cash flow, Q1 2024 to Q2 2026, US dollars. Free cash flow was negative in nine of the ten quarters as the company funded capacity ahead of orders. Source: Kratos Defense quarterly figures from its SEC filings, retrieved 21 October 2026. [6]* Citizens, the analyst firm, [cut its price target to $70 from $105 on October 19](https://www.streetinsider.com/Analyst+Comments/Kratos+Defense+%26+Security+%28KTOS%29+PT+Lowered+to+%2470+at+Citizens+Amid+Uncertainty%2C+Sector+Overhang/27199699.html) while keeping Market Outperform, blaming elections, budgets and the continuing resolution, not the company [3]. Kratos CEO Eric DeMarco is making the same bet he made when he bought CEi, the Sacramento drone maker he acquired in 2012 because its owner wanted to retire: capacity built ahead of demand wins the order [3]. Whether it does is decided by the fiscal 2027 vote, and a position taken before that vote is underwriting the ramp; one taken after it is paying for the confirmation. *Chart: **The Valkyrie line is ramping toward 35-40 a year on an order book of four** Valkyrie production: about 8 aircraft in 2025, 18 projected for 2027 and a 35-40 projection for 2028, against a signed Marine order of four aircraft* *Valkyrie/MQ-58 aircraft per year. The 2025 figure is reported; 2027 and 2028 are company projections and drawn as ranges where stated. Marine order to date: 4 aircraft, a one-time batch, not an annual rate. Source: Aviation Week, October 21, 2026. [1]* ## Takeaway Kratos is building Valkyrie capacity for 35-40 aircraft a year against a signed order of four jets; the fiscal 2027 appropriations vote decides whether the bet pays or shareholders absorb the line. ## Sources 1. [Aviation Week, Long-Term Bets Near Payoff For Acquisitive Kratos, 21 October 2026](https://aviationweek.com/defense/supply-chain/long-term-bets-near-payoff-acquisitive-kratos) 2. [Defence Industry Europe, Kratos begins construction of Indiana facilities for Navy AN/SPY-1 radar sustainment and hypersonic materials testing, 18 October 2026](https://defence-industry.eu/kratos-begins-construction-of-indiana-facilities-for-navy-an-spy-1-radar-sustainment-and-hypersonic-materials-testing/) 3. [StreetInsider, Kratos Defense & Security (KTOS) PT Lowered to $70 at Citizens Amid Uncertainty, Sector Overhang, 19 October 2026](https://www.streetinsider.com/Analyst+Comments/Kratos+Defense+%26+Security+%28KTOS%29+PT+Lowered+to+%2470+at+Citizens+Amid+Uncertainty%2C+Sector+Overhang/27199699.html) 4. [The Vanguard USA, Kratos orders parts for 3,000 TDI-J85 engines in 2027, 17 October 2026](https://thevanguardusa.com/7581/industry-energy/kratos-tdi-j85-3000-engines-2027-scaleup/) 5. [Investing.com, Kratos Defense stock hits 52-week low at $39.79, 20 October 2026](https://ca.investing.com/news/stock-market-news/kratos-defense-stock-hits-52week-low-at-3979-93CH-4881126) 6. [Kratos Defense, quarterly figures from its SEC filings, retrieved 21 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001069258) --- Kratos is building a drone line for 35-40 aircraft a year. Its order book is four. — The Inference. Canonical: https://theinference.org/article/kratos-is-building-a-drone-line-for-35-40-aircraft-a-year-its-order-book-is-four