Rumors of Program Cuts Starting to Swirl Affecting Boeing

by: Matthew Potter
January 13, 2012

Category: Air National Guard, Boeing, Business Line, Companies, Contract Additions, Contract Awards, Department of Defense, development program, Events, Federal Budget Process, Lockheed Martin, logistics, Military Aviation, production program, Restructuring, Services, States, U.S. Air Force, U.S. Marine Corps | RSS 2.0

If the Pentagon is really going to cut tens of billions of spending a year from its budget then it will not be able to nibble around the edges. What it will need to do is cancel whole programs. These will include ones in development as well as those in production and may also include ones that have yet to start yet. Already rumors of what will be cut are starting to come out in advance of any announcements by the Department of Defense.

Earlier this month it had been mooted that the C-27 Joint Cargo Aircraft (JCA) program would be eliminated. This is a light transport originally intended for the Army but now will be fielded to the U.S. Air Force Guard across the U.S. It was a program not really supported by the Air Force and now it is coming out that it might be on the block.

Another Air Force program that is now rumored to be on the chopping block is the C-130 Avionics Modernization Program (AMP). The C-130 made by Lockheed Martin (LMT) is a four engined transport used by the Air Force and Marine Corps. It has been in use since the 1950’s and the current C-130J is still being built today in Georgia.

The AMP adds a new glass cockpit along with the capability to meet the Global Air Traffic Control Management (GATM) requirements that all aircraft will be required to met by the end of this decade.

So far under the program Boeing (BA) has received a contract to modify 26 C-130 of which 6 have begun the AMP retrofit. The contract for the remaining 195 aircraft was supposed to be competed next year.

Ending the AMP would save about $2 billion over the next several years. Cutting it now makes sense as the follow-on contract has not been awarded.

The aircraft though will still ultimately need to be upgraded for GATM reasons but this could be done cheaper without the addition of the glass cockpit and other modifications.

It can be expected that further “rumors” of this sort will be floated as the next budget is developed that should include the first wave of cuts. As always in this situation Congress will have to weigh in with their blessing or changes to these types of decisions so politics will also play a role.

Photo from Nellis Air Force Base’s Flickr photostream.

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