Raytheon Profits Surge on Iran War Fears, CEO Cites Strong International Patriot Missile Demand

On January 30, 2020, Raytheon reported better-than-expected quarterly profits driven by surging international weapons demand, with company executives explicitly citing US-Iran tensions as a growth driver. The earnings announcement came just weeks after the January 3, 2020 US drone strike killing Iranian General Qasem Soleimani and Iran’s retaliatory missile attack on US bases in Iraq, events that escalated fears of broader US-Iran military conflict. Raytheon CEO Greg Hayes told investors that the company expected “solid growth” in Middle East sales, with integrated defense systems unit sales rising 17.6% to $1.98 billion, boosted by two international missile defense orders received in the third quarter. The company booked Patriot missile defense system contracts worth $1.1 billion during the period, with Saudi Arabia representing a major purchaser despite the systems’ spectacular failure protecting Saudi oil facilities just four months earlier in September 2019. The earnings report exemplified how defense contractors explicitly celebrated and profited from escalating military tensions and regional conflicts.

Profiting from Iran War Fears

Raytheon’s January 2020 earnings call made explicit what defense contractor critics had long alleged: the company’s profitability depended on and benefited from military conflicts and escalating tensions. Following the Soleimani killing and Iranian missile retaliation, Raytheon executives projected increased weapons demand from US allies fearful of Iranian attacks. The company’s Patriot missile systems became particularly attractive to Gulf states seeking air defense capabilities against Iranian missiles, despite the September 2019 failure of Saudi Patriots to intercept drone and cruise missile attacks. Raytheon successfully marketed Iran tensions as reasons for additional weapons purchases rather than as situations requiring diplomatic de-escalation. For investors, the Iran crisis represented a revenue opportunity that Raytheon management actively highlighted in financial presentations. The company’s stock performance reflected this dynamic, with share prices rising on news of US-Iran military confrontations that threatened regional war.

Patriot Sales Despite Performance Failures

Raytheon’s $1.1 billion in new Patriot contracts during this period occurred despite the September 14, 2019 failure of Saudi Patriot systems to protect oil facilities from drone and cruise missile attacks. The company successfully reframed that spectacular failure as demonstrating the need for more comprehensive air defense networks—including more Patriots and complementary systems—rather than as evidence of fundamental Patriot limitations. Raytheon argued that “layered” defense approaches combining multiple technologies (all available from Raytheon) would address the vulnerabilities exposed in September. Saudi Arabia and other Gulf states, having already invested billions in Patriot infrastructure, faced pressure to purchase additional systems rather than abandon their Raytheon dependencies. This dynamic created perverse incentives where system failures generated additional sales opportunities through vendor lock-in effects. The $1.1 billion in new Patriot contracts demonstrated that Raytheon faced no market accountability for performance failures when geopolitical tensions provided justifications for continued purchases.

CEO Statements on Middle East Conflict

Raytheon CEO Greg Hayes made explicit statements to investors celebrating Middle East conflicts as business opportunities. In earnings calls, Hayes stated “peace is not going to break out in the Middle East anytime soon,” framing ongoing conflicts as positive factors for company growth. He noted that Raytheon expected continued “solid growth” from Middle East weapons sales, implicitly acknowledging that regional violence and tensions drove company profitability. These statements, while honest about Raytheon’s business model, sparked criticism from peace activists who viewed the CEO as celebrating human suffering for corporate profit. Hayes defended the statements by arguing Raytheon simply responded to legitimate customer defense needs, not that the company created conflicts. However, critics noted that Raytheon’s massive lobbying expenditures on Middle East policy, its revolving door relationships with Pentagon officials making military policy, and its active marketing of conflicts as threats requiring weapons purchases all suggested the company helped create the very tensions from which it profited.

Significance

Raytheon’s January 30, 2020 earnings report celebrating Iran tensions as profit opportunities exemplified the moral economy of defense contracting, where corporate executives explicitly benefited from and marketed military conflicts and regional violence. CEO Greg Hayes’s statements about Middle East growth prospects and his subsequent comments that “peace is not going to break out anytime soon” revealed the fundamental misalignment between defense contractor incentives and public interests in peace and stability. For Raytheon, wars and tensions represented revenue streams to be maintained and expanded, creating incentives to lobby for military engagements and against diplomatic solutions. The $1.1 billion in Patriot sales despite September 2019 performance failures demonstrated how geopolitical tensions allowed contractors to escape accountability for system inadequacies—fear of Iranian missiles drove Saudi purchases regardless of Patriot effectiveness. The earnings report illustrated how defense contractors had systematically captured the policy process: Raytheon employed former Pentagon officials including Defense Secretary Mark Esper (confirmed July 2019), lobbied aggressively on Iran and Saudi policy, and profited from the resulting tensions and weapons sales. Hayes’s frank investor discussions about conflict as growth driver, while unusual in their explicitness, simply stated openly what defense contractor business models inherently required—ongoing military spending driven by conflicts and tensions. The episode demonstrated the structural corruption of allowing private companies to profit from warfare: Raytheon had financial incentives to promote military confrontations, employed former officials who made policy decisions affecting those confrontations, and used its lobbying power to ensure continued conflicts generated weapons purchases. For critics of the military-industrial complex, Raytheon’s January 2020 earnings report provided explicit evidence that Eisenhower’s warnings about defense industry influence had proven prophetic—the profit motive of weapons manufacturers was fundamentally misaligned with peace, creating incentive structures that perpetuated violence for corporate gain.