Bloomberg News

Boeing Lobbies for $2 Billion in Jets as Lockheed Delayed

March 29, 2012

The Navy’s program for the Super Hornet, the most modern version of the aircraft carrier-based F/A-18, calls for 565 aircraft. Photographer: Park Ji-Hwan/AFP/Getty Images

The Navy’s program for the Super Hornet, the most modern version of the aircraft carrier-based F/A-18, calls for 565 aircraft. Photographer: Park Ji-Hwan/AFP/Getty Images

Boeing Co. (BA:US) is pressing U.S. lawmakers to back production of as many as 37 additional Super Hornet fighter jets valued at about $2.5 billion, as the Pentagon delays Lockheed Martin Corp.’s new F-35.

Boeing is lobbying for a $60 million increase in the Navy’s fiscal 2013 budget for advance purchases of materials to keep building F/A-18 E/F Super Hornets beyond 2015. The money would avert a shutdown of the fighter’s assembly line and might help reduce a shortage in jets the Navy needs, according to a document the company distributed on Capitol Hill.

Current Navy plans call for completing funding for the Super Hornet program in 2014, with deliveries of planes continuing through 2015. Boeing’s supporters in Congress are seizing on budgetary and production delays for Lockheed (LMT:US) Martin’s new F-35, the Joint Strike Fighter, as a rationale for buying more Super Hornets.

Adding Super Hornets would be “a bargain to the Navy,” said Democratic Senator Claire McCaskill of Missouri, where Boeing builds the Super Hornet in its St. Louis plant.

“We need the jets on the carriers,” McCaskill, who serves on the Senate Armed Services Committee, said in an interview. “Obviously it is much less expensive than the JSF, and the JSF is way behind.”

Super Hornet Jobs

The Super Hornet program supports 100,000 direct and indirect jobs and has 1,900 suppliers across the U.S., according to Boeing’s document circulating on Capitol Hill. Among suppliers are Northrop Grumman Corp. (NOC:US), which makes the aft and center fuselage; General Electric Co. (GE:US), which makes the engines; and Raytheon Co. (RTN:US), which makes the radar.

Chicago-based Boeing, the world’s largest aerospace company, has fought to remain a producer of U.S. military tactical aircraft alongside Lockheed Martin. Bethesda, Maryland- based Lockheed, the world’s largest defense contractor, is building versions of the F-35, the Pentagon’s costliest program, for the Air Force, Navy and Marine Corps.

In February, Defense Secretary Leon Panetta proposed delaying the purchase of 179 F-35s beyond 2017 to save $15.1 billion as the Pentagon seeks to cut $487 billion from its budget over the next decade. The first 63 F-35 fighters are exceeding their combined target cost by $1 billion, and aircraft deliveries are on average more than a year late, according to the Government Accountability Office. Full-rate production has been delayed five years, according to GAO testimony to Congress on March 20.

F-35 Development

Michael Rein, a Lockheed spokesman, cited in an e-mail yesterday a statement by Panetta that the Defense Department is “100 percent committed to the development of the F-35.”

The Navy’s program for the Super Hornet, the most modern version of the aircraft carrier-based F/A-18, calls for 565 aircraft. Boeing says it will shut down its St. Louis production line unless there are additional planes, leading to a loss to the U.S. industrial base, according to the company document distributed to Congress.

Boeing currently has a multiyear contract ending in fiscal 2013 and valued at $5.3 billion for 124 aircraft, including an electronics-jamming version of the aircraft called the Growler. The final delivery for aircraft that the Navy will buy in 2013 will come in 2015, according to Defense Department budget documents.

Multiyear Contract

Navy leaders would like to extend the multiyear contract and buy 13 more of the latest F/A 18 models in 2014, according to March 20 congressional testimony submitted by Navy officials including Vice Admiral Mark Skinner, the principal military deputy to the assistant secretary of the Navy for research, development and acquisition.

For fiscal year 2013, the Navy requested about $30.2 million in advance procurement of materials for the aircraft, according to Defense Department documents.

Boeing wants the additional $60 million for advance procurement of 24 more aircraft in the budget that Congress will write in coming months, according to the document circulated in Congress.

Continuing with a multiyear contract “is going to save us a lot of money,” McCaskill said.

Cost Projections

The Pentagon projects the current multiyear contract for the Super Hornets will save $852.4 million compared with procuring aircraft through annual contracts. The “flyaway” cost of a Super Hornet averages $67 million this year, according to Pentagon budget documents. The flyaway cost doesn’t include research and development, support and training equipment, technical data or spare parts.

Boeing also wants Congress to put language in its annual defense authorization measure encouraging the Navy to keep the production line open to meet future needs.

The Super Hornet “offers unmatched capability, availability and affordability for naval aviation,” Boeing spokesman Sean McCormack said in an e-mailed statement. The fighter offers “date-certain deliveries, cost-certain production and proven combat capability,” McCormack said. McCormack declined to comment on the company document circulated on Capitol Hill.

Combat Missions

Super Hornets and older Hornets have conducted more than 148,000 combat missions since the terrorist attacks of Sept. 11 and continue to provide support to deployed U.S. troops, according to the Navy. Two Super Hornet versions -- the single- seat E model and the two-seat F model -- have been in service with the Navy since November 1999.

The Super Hornet “provides great leverage for those that are building the Joint Strike Fighter,” Admiral Jonathan Greenert, the chief of naval operations, told members of the U.S. House Appropriations committee this month. “I think that we need to keep an eye on it.”

The Navy and the Marine Corps, which is part of the Department of the Navy, each operate hundreds of strike fighters, aircraft that can conduct both air-to-ground and air- to-air operations. F/A-18s are the principal strike fighters operated by the Navy and Marines, according to the Congressional Research Service.

Retiring Older Planes

The Navy plans to retire older versions of the F/A-18 and shift to a combination of Super Hornets and carrier-based F-35s. The Marines are seeking a strike-fighter fleet made up solely of the F-35 version designed for short takeoffs and vertical landings and carrier-based jets once it can no longer extend the life of its Hornets and Harrier aircraft. The Marine Corps is looking at ways to keep its AV-8 B Harriers flying for as much as 20 more years, according to Skinner.

The Navy estimated last year that it sees a fighter shortage for its 11 aircraft carriers starting in 2015. Pentagon officials, including Panetta, said last year that the Pentagon needed to buy more Super Hornets as a hedge against delays in F- 35 production.

The Navy projects its shortage of strike aircraft to “remain below a manageable 65 aircraft through 2028, with some risks,” said Captain Cate Mueller, a Navy spokeswoman. The shortage is affected by use of the aircraft fleet and deliveries of fighter jets as well as the Navy and Marine Corps force structure, according to Mueller.

“The Department of the Navy continues to meticulously manage the fatigue life and flight hours of our tactical aircraft,” Mueller said in an e-mailed statement. The Navy “continues to evaluate all options to manage the strike fighter inventory,” she said.

To contact the reporter on this story: Roxana Tiron in Washington at rtiron@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net


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Companies Mentioned

  • BA
    (Boeing Co/The)
    • $127.38 USD
    • -1.39
    • -1.09%
  • LMT
    (Lockheed Martin Corp)
    • $182.78 USD
    • 1.42
    • 0.78%
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