Boeing didn’t get the deal to sell Japan a batch of new fighter jets. Still, there are plenty of other militaries in the sea, as it were, and the company made clear this week it’s just going to keep right on making the pitch for its portfolio of older-model fighters.
In fact, Reuters’ Andrea Shalal-Esa and Karen Jacobs report that Big B could be right on the edge of a major announcement with Saudi Arabia, which may be close to inking a deal for a new set of F-15 Eagles:
Losing a big Japanese order to Lockheed Martin was clearly a disappointment for Boeing, but a $29.4 billion order from Saudi Arabia for F-15 fighter jets and several other competitions will keep the company in the fighter business for now. The U.S. government and Saudi Arabia are finalizing a letter of agreement on the sale of 84 Boeing F-15s, and may announce that deal soon, according to two U.S. government sources, who were not authorized to speak publicly.
Boeing, which has rung up big orders for its commercial planes this year, also remains competitive in several other big-ticket military competitions in South Korea, Brazil, United Arab Emirates, Malaysia and possibly Denmark, company officials say.
“Japan was one competition. There are lots of others to go after,” said Boeing spokesman Paul Lewis, saying that both Boeing’s F/A-18 Super Hornet, and the new Silent Eagle, a partly stealthy version of the F-15, had future business prospects. “We’re delivering airplanes today with a known cost and known schedule … I think it’s a bit presumptuous and bit of a stretch to be talking about the demise of our fighter airplanes,” he said.
In fact on Wednesday, the company announced it has signed “memoranda of understanding” with Brazilian manufacturers as part of a potential deal to sell Super Hornets down there. Boeing wants to lay the groundwork for an offer that would not only involve its latest and greatest F/A-18s, but ones that have the potential to be at least partly built by Brazilians. Here’s what the company said in its announcement:
The MOUs resulted from a recent tour of companies based in São Bernardo do Campo and throughout the industrial region in the state of São Paulo. Representatives from Boeing and its Super Hornet industry partners visited businesses throughout the region to assess and match their capabilities with future work-placement opportunities. MSM and Pan Metal join more than 25 other companies throughout Brazil that Boeing and its industry partners have already identified as potential suppliers. This enhances Boeing’s industrial participation offer on the F-X2 fighter program, with a focus on identifying near-term opportunities.
So although Boeing may have lost to Lockheed in Japan — and both companies lost (so far) to Euro-builders in India — Boeing says it’s committed to try, try again. But how long can it capitalize on the same old jets? Shalal-Esa and Jacobs’ Reuters story makes clear that the company is heading into a time as much of risk as opportunity:
“The day of reckoning is looming fast,” said Richard Aboulafia, aerospace analyst with the Virginia-based Teal Group. “There’s going to be some kind of sixth generation fighter requirement emerging, but that’s a long way off. Boeing is going to have to consider how to keep their design teams engaged.”
Looming budget cuts in the United States may also constrict funding for a new long-range bomber, the only big new U.S. airplane development program still on the horizon, which will put pressure on companies to team up, or begin shedding design engineers, analysts say.
This is the risk the Aerospace Industries Association has been warning about all this time — the risk that a fallow period for American combat aircraft might mean it could never field another new one.
By Philip Ewing
December 21st, 2011