Despite lower profits and earnings for some aerospace and defense companies, exchange traded funds (ETFs) may still benefit from good ratings that remain for the sector overall.

Lockheed Martin Corp. (LMT) reported better-than-expected earnings but the costs to keep the employees compensated have dragged on any gains. It seems that pension expenses are the heaviest weight of all upon the company’s profit. Defense Secretary Robert Gates’s budget shake-up won’t affect its 2009 outlook, according to a Pentagon insider, reports August Cole and Kerry R. Grace for The Wall Street Journal.

The company’s first-quarter net income dipped 8.8% to $666 million, or $1.68 a share, from $730 million, or $1.75 a share, a year ago. The pension-related expenses of 19 cents a share and a pension gain boosted year-earlier earnings by five cents a share.

Robert Gates of the Pentagon wants to end what would be a Lockheed-led effort worth more than $13 billion to build replacement presidential helicopters and to wind down production of Lockheed’s F-22 Raptor fighter after 187 jets are built.In the meantime, the F-35 would be a sale booster in Lockheed’s future.

Boeing (BA) today reported sharply lower earnings. The aircraft manufacturer states that the global economic meltdown has really taken its toll on airline travel and the commercial airline markets. Analysts forecasted earnings of $0.93/share, but actual earnings were $0.86 cents/share.

Fitch Ratings gave the outlook for the sector a solid bill of credit and proposals were not as dramatic as anticipated, reports Associated Press for Forbes. While Gates’ proposal will shift Pentagon spending, they weren’t as dramatic as had been expected. The full financial impact won’t be known until the budget is released, but Fitch is optimistic that revenues will remain stable.

  • PowerShares Aerospace and Defense (PPA): down 9.3% year-to-date; Lockheed 6.7% of assets; Boeing is 6.6%

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.