Boeing spies chance for new jet contract

Boeing, maker of the Super Hornet fighter jet, is hoping to capitalize on both the Navy’s projected shortfall of carrier strike aircraft and a program delay in Lockheed Martin’s high-profile Joint Strike Fighter to sell more of its planes to the Navy.

The stakes are high, for Boeing could eventually be inched out of the domestic fighter jet business if the Navy does not buy more F/A 18 E/F Super Hornets after fiscal 2012. Boeing and Lockheed Martin are the two U.S. fighter assembly companies.

Boeing plans to sell the Super Hornet abroad, but those plans would be more viable if there were also domestic sales, Boeing officials say.

To this end, the company is positioning itself to promote its program in Congress and in the Navy, setting the stage for a potential tussle amid tight funding between its supporters and those of Lockheed Martin.

This year is critical to Boeing because the Navy is analyzing its strike aircraft shortfall and this summer will begin outlining its needs for the six years beginning in 2010.

Facing a projected shortfall of up to 226 aircraft in the next 10 to 15 years, the Navy must figure out the mix of aircraft on its carrier flight decks. The shortfall depends on the rate at which the Navy will buy the Joint Strike Fighter (JSF) and the service life of all F/A 18 variants, according to a Navy official.

Boeing’s vice president for F/A 18 programs, Bob Gower, said his company is ready to make the advanced version of the fighter one of the Navy’s options. The company is banking on the program’s record of timely delivery and good performance.
“The Navy has been very supportive of the Super Hornet,” said Gower, adding that the service had always planned to fly both Super Hornets and JSFs from its carriers through 2030.

The Navy’s analysis will determine how many old F/A 18s should be replaced by the E/F versions, and how to fill the gap until the JSF reaches operational capability.

The Navy significantly cut its JSF order through the end of this decade and into fiscal 2011. It has also pushed back the initial operational capability by several years. 

The Navy’s assessment of its shortfall analysis may end up justifying a multiyear procurement of the Super Hornet, said Gower.

Under a current multiyear contract with Boeing, which runs until 2009, the Navy is buying 42 Super Hornets a year. The multiyear procurement started in fiscal 2005 and is projected to save $1 billion compared to a yearly contracting mechanism.
Boeing is outfitting the Super Hornets with the Raytheon APG-79 Active Electronically Scanned Array (AESA) radar, which gives the aircraft a greater range and the ability to track many targets.

“The AESA radar is a game-changer. It allows you to do simultaneous air and ground missions,” Gower said in an interview. “Our focus on the Super Hornet is staying ahead of the threat.” The goal is to update the aircraft continuously under a so-called “flight plan” with technologies that will allow it to keep its edge through 2020, said Gower.

The program ends in fiscal 2012, but another multiyear purchase could extend it beyond that date. The price of a Super Hornet in the current contract is $53.8 million, but Boeing would cut this to $50 million in a new multiyear contract, Gower said.

“We are trying to more than offset inflation and at the same time adding capability for the war fighter,” he added.
A recent congressionally mandated Pentagon report said that the long-term viability of Boeing’s St. Louis, Mo., assembly line is questionable with the looming end of the Navy’s Super Hornet purchases in fiscal 2012.

“It is critical for Boeing to keep the production line open [as well as] the suppliers’ base,” said Gower.  Competition also allows aerospace companies to make more investments in research and development and keep the price of aircraft down.
“Competition keeps all of us sharp,” said Gower.

Lockheed Martin spokesman John Smith said that his company’s position has always been that “the F-35 was brought to life to be a complement to the F/A 18.”

To avert a crisis, Boeing is starting what Gower called an education campaign in Congress and the Navy about the Super Hornet.

Meanwhile, it is pursuing international sales campaigns in countries such as India, Kuwait and Malaysia. It recently cut a $6 billion deal with Australia for the advanced Super Hornet, creating some unease at Lockheed Martin, which feared that Australia, a partner on the JSF, would cut its purchases of that aircraft. Australia bought the Hornet to fill a gap until it received the JSF.

According to reports in Australian news media, Tom Burbage, executive vice president of Lockheed Martin’s JSF program, said he was surprised by the government’s decision to buy 24 Hornets, saying they would be vulnerable to attack in 10 years.
Fearing money would be taken from Australia’s JSF program to pay for the Hornet, Burbage sought an urgent meeting with Australian Defense Minister Brendan Nelson, who allayed his fears.