Boeing beats Lockheed for $9.2bn Air Force trainer jets

Bloomberg

Boeing Co. defeated Lockheed Martin Corp. to win its third prize in a recent flurry of defense contracts, snaring a US Air Force contest valued at as much as $9.2 billion to build training jets to hone the flying skills of future aviators.
The 351 to 475 training aircraft and 120 ground-based training systems would be produced at Boeing’s St. Louis plant through 2034, the Air Force announced. The service is initially issuing a contract for $813 million, including engineering and manufacturing development.
With the win, Boeing swept the trio of high-profile contracts awarded before the September 30 close of the federal fiscal year. The aerospace giant also scored a potential $13 billion franchise to build MQ-25 carrier-based refueling drones for the US Navy, and with Leonardo SpA jointly won a $2.38 billion contest to replace a fleet of Huey helicopters guarding the Air Force’s intercontinental ballistic missile sites.
The victories end a string of disappointments for Boeing, from the 2015 stealth-bomber competition that went to Northrop Grumman, and the joint strike fighter contest won by Lockheed’s F-35 in 2001.
Boeing rose less than 1 percent to $367.39 at the close in New York.
The winning streak provides a boost to Boeing’s Defense and Space division, which is poised to rebound after shrinking for most of the past decade. Boeing’s military arm has been eclipsed by the rapid growth of its commercial-jet unit this decade. The defense division accounted for 23 percent of sales last year, down from 50 percent in 2010.
The T-X Trainer programme will replace the Air Force’s half-century-old fleet of T-38 supersonic jets that have helped prepare fighter pilots for combat since John F. Kennedy was president. Boeing may go on to claim hundreds of overseas orders for planes and spare parts stretching over decades as the Pentagon programme spurs other countries to upgrade their trainer fleets. The Teal Group of Fairfax, Virginia, forecasts a global market for 2,441 turbofan-powered trainers valued at $30.3 billion over the next decade, according to a December research report.
The contest pitted an all-new aircraft and flight simulators created by Boeing and Stockholm-based Saab AB against entries based on existing models from a Lockheed-Korean Aerospace Industries partnership and from Rome-based Leonardo, bidding through its DRS subsidiary. Northrop Grumman Corp., Textron Inc., Sierra Nevada Corp. and Raytheon Co. were among the companies that dropped out of the competition.
Pentagon officials credited the competition with trimming programme costs by more than $10 billion. The original service cost estimate was $19.7 billion for 351 aircraft. The first T-X aircraft and simulators are scheduled to arrive at Joint Base San Antonio-Randolph in Texas in 2023.
“This new aircraft will provide the advanced training capabilities we need to increase the lethality and effectiveness of future Air Force pilots,” Air Force Secretary Heather Wilson said.
While the Air Force has a firm requirement for 351 trainers, the $9.2 billion potential value reflects contract options that would increase the fleet to 475 if exercised, Will Roper, the service’s weapons buyer, said.
Military aircraft contests have been few and far between in an era of budget constraints, so even contracts for less-sophisticated jets such as trainers are highly prized as prime defense contractors like Boeing work to keep airplane designers sharp and factories humming.