Loitering munitions can be considered a disruptive technology and a non-traditional ranged weapon. Filling the role between cruise missiles and unmanned combat aerial vehicles (UCAVs), they possess the low operational and procurement costs of UCAVs while obtaining the capabilities of cruise missiles. As with other aerial vehicles, loitering munitions were designed with weight optimization in mind. Weight optimization can be achieved by using lightweight composite materials, such as carbon-fiber reinforced polymers (CFRP). Due to its high strength-to-weight ratio, however, CFRP can potentially dampen the explosive power of a loitering munition’s warhead. Thus, it lowers its damage performance significantly. This paper aims to investigate the effect of composite parameters, namely the type of fibers, fiber directions, and overall composite thickness on the damage performance of loitering munitions. The HESA Shahed 136 model, equipped with a high-explosive warhead, is used for analysis in this paper. The parameters used to assess damage performance are the damage dissipation energy absorbed by the composite shell and the maximum velocity generated by the explosion. We performed sensitivity analysis by varying various material parameters. The simulation results show that the CFRP shell indeed dampens the explosion and therefore, it is very critical to design the monocoque with suitable material properties and dimensions.