Boeing Co was chosen to manufacture the US Air Force’s next training jet in a contract worth up to $9.2 billion over the life of the program, the Air Force said.
Boeing joined forces with Sweden’s Saab AB to design a new plane for the competition, beating out Lockheed Martin Corp and Leonardo DRS.
The Air Force at present is planning to buy 351 of the jets and 46 simulators. Additional purchase options on the $9.2 billion contract could enable the Air Force to buy as many as 475 jets and 120 simulators.
The service expects the first jets to be delivered in the year 2023 with the program to reach full operation by 2034.
In its bid, Lockheed had offered a modified version of its T-50 training jet manufactured in conjunction with Korea Aerospace Industries Ltd, while Italy’s Leonardo DRS had offered the T-100, which is a modified version of the Italian aerospace company’s M-346.
Boeing shares crept higher after the new broke out, to finish up 0.6 percent at $367.38. Meanwhile, shares of Korea Aerospace slipped more than 24 percent in Seoul. The company said its group lost the competition because Boeing’s bid was lower.
The Air Force wants to replace its aging fleet of T-38 planes, which are pushing 50 years old. Analysts have said that it could eventually buy as many as 600 planes.
General Arnold Bunch of the office of the assistant secretary of the Air Force for acquisition said that “two-third of what we train for the fighters in the fourth and the fifth gen we actually can’t do in the T-38.”
Winning the contract is significant for Boeing, which reorganized its defense business more than year ago in the hopes of a “franchise level” triumph such as the trainer.
Landing huge defense contracts had been tough to accomplish for Boeing, but Leanne Caret, who is the chief executive of Boeing’s Defense, Space & Security since February of 2016, has aided the company to seal more contracts.
“Today’s announcement is the culmination of years of unwavering focus by the Boeing and Saab team,” said Caret in a released statement. “We expect T-X to be a franchise program for much of this century.”
The award from the US Air Force comes after Boeing has had some problems delivering to the Air Force its new in-air refueling jet, which is the KC-46.
In a statement, Saab stated that the award means Boeing can now start placing orders with its suppliers, which include Saab, but has not done so yet. Saab said that more than 90 percent of Boeing’s offering will be accomplished in the United States, backing up more than 17,000 jobs in around 34 states.
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