Boeing Faces a Future Without Fighter Jets

Discussion in 'Military Aviation' started by AVERAGE INDIAN, Sep 20, 2014.

  1. AVERAGE INDIAN

    AVERAGE INDIAN EXORCIST Senior Member

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    Boeing Co. BA +0.60% , which has built military planes for almost a century, is preparing for the prospect of a fighter-less future.

    The steadfast commitment of the U.S. and many allies to the F-35 Joint Strike Fighter program made by Lockheed Martin Corp. LMT +0.65% is drying up funding for Boeing's fighters. Now, the head of Boeing's defense unit is preparing a road map that would concede the fighter market to Lockheed and pin the business's future on other aircraft, including military versions of its commercial jetliners.

    "You have to face reality," Chris Chadwick, president of Boeing, Defense, Space & Security, said of the company's shifting focus in an interview in July.

    Boeing's fighters are still heavily used today—its F/A-18 jets have been leading U.S. airstrikes in northern Iraq. But it faces a dearth of new orders. Production of the F/A-18 could end in 2017, while the last batch of F-15s bound for Saudi Arabia are due to roll off the production line in 2019.

    The company is considering slowing production to keep the F/A-18 line running a little longer in the hope it can persuade the Pentagon to fund some additional purchases for the Navy. This could also buy time for a handful of potential international customers—notably Canada and Denmark—to decide on planned fighter buys


    Boeing has said it may decide by April whether to end F/A-18 production at the St. Louis, Mo., plant that makes both fighters. "We're still solidly behind them," Mr. Chadwick said in an interview Thursday following an earlier report by The Wall Street Journal. He believes the F/A-18 can be sustained through the end of the decade.

    Mr. Chadwick, who became chief executive of the defense and space unit on Dec. 31, has unveiled cost-cutting and efficiency measures to adapt to tighter military budgets. Boeing reduced the defense unit's spending by $4 billion annually over the past three years, shedding thousands of jobs, and he is targeting another $2 billion in savings as militaries in the U.S. and elsewhere place more emphasis on the affordability—rather than capability—of weapons systems.

    Mr. Chadwick, 54 years old, presented his strategic review to Boeing's board in late August, and is expected to roll it out to staff in early October, according to people familiar with the plan.

    He plans to move responsibilities and products around within the defense unit's three core divisions—Military Aircraft, Networks and Space, and Services and Support—and target higher services revenues to keep annual sales above $30 billion. The defense unit last year accounted for $33 billion of Boeing's $86.6 billion in total revenue.

    Mr. Chadwick, in a video for employees this month, flagged the need for tough choices. "These decisions may include how we shape our business and where we choose to locate resources," he said.


    P-51 Mustang: The iconic World War II fighter was made by North American Aviation, now part of Boeing. At least eight versions of the P-51 were produced. Associated Press
    People briefed on the plan said that while most of the changes involve internal staff roles and targets, Mr. Chadwick is prepared to shed programs such as the fighters. Even Boeing's long-standing role in manned spaceflight was in question before it won a $4.2 billion contract from the National Aeronautics and Space Administration to build and operate a new manned space taxi.

    The seeds of Boeing's fighter woes were sown in October 2001 when Lockheed Martin was picked to build the Joint Strike Fighter, a $400 billion program designed to replace most of the U.S. military's tactical fighters.

    Boeing lobbied furiously to win new orders for its F/A-18 jets, but after losing a series of contests in India, South Korea and Brazil it faces a dwindling number of available deals, notably Canada's long-delayed fighter replacement program.

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    F-4 Phantom II: The F-4 entered service in 1961. More than 5,000 were built by McDonnell Douglas, which Boeing acquired in 1996. Transtock/Corbis
    Boeing also is closing the Long Beach, Calif., plant that makes C-17 military cargo jets next year. Combined with the end of F/A-18 and F-15 production, the moves will cut 50% of the revenue from the existing military aircraft unit. The business also produces helicopters and some munitions.

    "Boeing is kind of at a crossroads," said Michel Merluzeau, managing partner at aerospace consultancy G2 Solutions LLC. "They sit between their legacy portfolio, and a reshaping portfolio."

    Boeing sold its first military plane to the U.S. Navy in 1917, a twin-pontoon biplane called the Model C. The PW-9/FB, its first fighter, followed in 1923. The company produced iconic aircraft during World War II, including the B-29 Superfortress bomber, which dropped the atomic bombs over Japan. Boeing's B-52s remain in service with the U.S. Air Force more than 60 years after their first flight.

    Boeing's 1996 acquisition of McDonnell Douglas Corp. revitalized a defense business that five years earlier generated only 10% of group sales, ranking it 10th in the world, trailing General Electric Co. GE +0.31% and even General Motors Co. GM -0.26%

    For most of the past decade or so Boeing ranked second after Lockheed. The defense and space unit generated more than half of Boeing's revenue, before the boom in commercial airplane sales over the past three years reversed the equation.

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    Boeing's purchase of McDonnell Douglas in 1996 added the F-15 Eagle to its lineup. U.S. Air Force/Getty Images
    Boeing Chief Executive Jim McNerney told investors in July that keeping defense and space revenue around $30 billion a year requires replacing the lost fighter revenue by winning contracts such as a new long-range strike bomber, a proposed Air Force trainer jet and the Navy's UCLASS carrier-based drone program.

    "Our opportunity to win those [new contracts]—a couple of those—is good, which would mitigate risk on the fighter side as the F/A-18 and the F-15 over the next decade face some sunsetting," Mr. McNerney said.

    Mr. Chadwick said Thursday that winning the trainer contract and potential new sales of the F-15 would keep its design teams in St. Louis active. While the F-35 is designed to have a 50-year life, the Air Force has started discussing what kind of fighter might follow it.

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    B-52 Stratofortress: Pictured circa 1954, the B-52 remains a mainstay of the U.S. bomber fleet. The latest version can carry up to 20 air-launched cruise missiles. Bettmann/Corbis
    But Boeing faces steep challenges for all three contracts. With the bomber program, the largest, Boeing and Lockheed are bidding together against Northrop Grumman Corp. NOC +0.92% , which some analysts believe is further ahead in its development work.

    Boeing is one of four companies competing for the next stage of the Navy drone program, a field that could be narrowed this month. It has teamed up with Sweden's Saab SAAB-B.SK -1.32% AB to develop a new trainer, though no government funding has been spent on the program.

    Mr. Chadwick previously headed the military jet business before taking over the defense unit. He said just winning new programs to replace fading ones isn't enough. Boeing wants to build more software products, emulating the technology industry's effort to balance sales of hardware.

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    Model C: The U.S. Navy bought 51 of these seaplanes, with a cruising speed of 65 mph. The first flight of a Model C trainer was in 1916. Boeing
    But exactly what that software business would look like isn't clear. It would seek to address growing demand for data analytics among military and intelligence agency customers, Mr. Chadwick said, but "we are still defining it."

    Mr. Chadwick's ambition is to make Boeing stand out from its rivals.

    "If you look at the commercial world there are clear differences between an Apple and a Microsoft, between a Google and a Facebook," he said. "If you look at the defense industry it is not that clear. So our focus is: how do we break from the pack?"

    Write to Doug Cameron at [email protected] and Robert Wall at [email protected]

    Corrections & Amplifications

    Boeing acquired the maker of the P-51 Mustang fighter in 1996. An earlier version of this article and a photo caption suggested Boeing produced the aircraft during World War II.

    Boeing Faces a Future Without Fighter Jets - WSJ
     
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  3. AVERAGE INDIAN

    AVERAGE INDIAN EXORCIST Senior Member

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    Boeing has plenty of future if the US govt trust and and let the Boeing off the hook then Boeing can literally earn billions of dollars from india with decent transfer of tech and huge orders for the next 10 to 20 years
     
  4. p2prada

    p2prada Stars and Ambassadors Stars and Ambassadors

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    It would be great if the IN and the USN jointly develop the NGAD along similar lines as the FGFA.

    It may become pretty important for USN and IN to have joint ops capable fleets in the future, starting with similar fighter aircraft. We can fulfill our currents needs for the next 15 years with the F-35. The follow up NGAD program can take care of our requirements post-2030.

    Both IN and USN requirements should be very similar by 2030 when it comes to numbers. Boeing will obviously benefit. And with enough numbers, both affordability and capability can be achieved.
     
  5. Dhairya Yadav

    Dhairya Yadav Regular Member

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    Sad to see Boeing going out of Military business... its my favourite aerospace company.... the place they should continue to invest is in trainer market. there is huge potential in that area plus a need for replacements by many air forces in the world.
     
  6. ninja85

    ninja85 Regular Member

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    don't they excel in drones and uav thats what america gonna use in future so boeing will be in full business.
     

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