Joint Strike Fighter Gap Leads To Navy Order For Boeing

by: Matthew Potter
May 31, 2010

Category: Boeing, Business Line, Companies, Congress, Contract Additions, Contract Awards, Department of Defense, development program, Events, Lockheed Martin, logistics, Military Aviation, production program, Services, U.S. Marine Corps, U.S. Navy | RSS 2.0

The F-35 Joint Strike Fighter (JSF) being developed by Lockheed Martin (LM) is the future of American military aviation. It will replace substantial numbers of F-16, F-18 and AV-8 aircraft currently in use by the Air Force, Navy and Marines. Many of these fighters are now old and need to be retired and the original schedule for the F-35 had it coming into service now to do so.  Due to the problems with the JSF the Navy has decided to go ahead and order more F/A-18 aircraft from Boeing (BA) to fill the extended “fighter gap”.

Like many acquisition programs of its size and scope the JSF has had issues. It is over budget and currently two years behind its latest adjusted schedule. This means that the aircraft won’t be entering service in large numbers until the latter half of the next decade and the aircraft it slated to replace will need to fly longer. The Pentagon will have to spend more money in maintenance and upgrades to keep them capable against an evolving threat.

Earlier this year the Navy had discussed extending the F/A-18 contract with Boeing (BA) to buy more aircraft to fill this potential gap. The new fighters would fill the time waiting for the JSF and allow retirement of older models of the aircraft. This is an expensive plan and would reinforce that the JSF is struggling. The Navy was talking to Congress and Defense leadership about this.

President Obama’s Secretary of Defense, Robert Gates, had built the last two budgets around the JSF. He canceled the F-22 which was the only other advanced fighter in production for the U.S. military and restructured the program to increase early production. All these plans fell apart this year when it was announced that the average cost of the aircraft had doubled when all program costs were included and that further delays to testing and production were expected.

The new contract is for 124 more F/A-18 aircraft on a four year contract. The Navy worked hard to negotiate a reduced price for this, the potentially last, production batch. The total price will be about $5 billion.

This is good news for Boeing who looked like they were going to be out of the military aircraft business for a few years. There F-22 was canceled. Production of the C-17 transport was going to end soon as in the 2011 budget the Pentagon had ordered none. Congress in 2009 and 2010 had added transport aircraft to the budget but the will for next year was lacking. There is potential for winning the new KC-X tanker but that won’t have deliveries until 2011 or later.

The C-17 situation has been made worse by the decision of the workers to go on strike last week. Some are even predicting that because of this strike the program will come to an end. Congress kept the line going to keep workers in Long Beach, CA at the plant employed. Now they are on strike that argument becomes limited.

Boeing got some good news this week. $5 billion in aircraft orders with a potential for billions more to build parts and do depot and maintenance work is nothing to sneeze at. The extension of the line also helps the company bid on overseas sales in the future. JSF problems have led to a big gain for one of Lockheed’s competitors.

The remaining question is whether the Air Force and Marines will follow suit and also buy their own “gap filler” aircraft. This could mean even more orders for Boeing or other U.S. defense contractors. / CC BY 2.0
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