By Sharon Terlep
The U.S. is entrusting its most expensive jet-fighter program in history to a company that hasn't successfully launched a commercial or military aircraft in a decade.
Boeing was selected last week by the Pentagon to build the Air Force's next-generation manned jet fighter, beating out Lockheed Martin in a move that surprised Wall Street and left Lockheed disappointed.
The Pentagon's decision couldn't come at a more crucial time for Boeing, which is trying to pull itself out of a nose dive after a series of safety problems with its 737 MAX jet, a crippling strike and six straight annual losses. Not only did Boeing lock down a contract that could top $50 billion, the deal is structured to guarantee a profit through the development stage of the project -- something Boeing sorely needs. Boeing's defense business represents around one-third of the company's revenue but has lost billions of dollars over the past several years, while Boeing says it has been locked into money-losing Pentagon contracts.
The new manned fighter, dubbed the F-47, is designed to fight with semiautonomous drones and will have new stealth and long-range strike capabilities. It is the type of sophisticated air-to-air warplane the Air Force says is vital to deterring China's military in the decades ahead.
Boeing wasn't the obvious choice to build the next-generation jet fighter.
"It's not the fighter central that it once was," Bank of America analyst Ron Epstein said of Boeing, adding that the company would need to hire engineers capable of pulling off the project.
The Boeing jet fighters currently in flight were developed and launched before the company's 1997 merger with rival McDonnell Douglas. Lockheed and Northrop Grumman make the Air Force's mainstay F-35 jet fighter and B-21 bomber, respectively. Unlike Lockheed, Boeing has never before built a stealth aircraft. Boeing's T-7 trainer was developed and manufactured jointly with Saab.
Boeing has faced delays and glitches on many programs, including its Air Force One replacement and its 777X wide-body jet.
Delivery on the new Air Force One is so far behind that Boeing told the Air Force last year that it would likely happen after President Trump's second term. The initial contract, struck with Trump during his first term, called for delivery in 2023. Frustrated with the delays, Trump has been pushing for a faster timeline, which Boeing Chief Executive Kelly Ortberg has said the company is trying to meet.
Delays also plague Boeing's commercial business. The 777X, designed to connect the globe's major cities, was initially set to begin deliveries in 2020 and now might not fly until next year or later. Two new 737 MAX variants also are behind schedule because of issues with an anti-icing system and heightened regulatory scrutiny following last year's fuselage-panel blowout on an Alaska Airlines flight.
Lockheed's own woes with the F-35 program -- including delays, cost overruns and design and software challenges -- probably didn't help its case with the Pentagon, either.
Pulling out of a nose dive
Boeing's storied military past includes a raft of jet fighters, bombers, helicopters, transport planes and missiles. But in recent years, Boeing has been beaten out by rivals in several high-profile competitions for U.S. government programs.
The latest deal was a contest Boeing couldn't afford to lose. The company spent $2 billion to expand its St. Louis complex where the F-47 is expected to be built, and Boeing has been flying an experimental version of the jet fighter for years. The company's defense arm made the biggest investment in its history to prepare for the F-47 bid, Boeing's interim defense chief Steve Parker said.
Neither Boeing nor the Trump administration released cost estimates for the entire program. The development phase, in which the company will develop and test the aircraft, is covered by a so-called cost-plus agreement, meaning that the Pentagon will cover Boeing's expenses, as well as other fees.
That is a change from some of Boeing's previous Pentagon deals -- fixed-price agreements in which the company had to swallow unexpected costs. Ortberg, Boeing's CEO, has vowed to avoid such deals going forward.
The stakes for Boeing are high.
The jet fighter's name appears to be a homage to Trump, who is now serving as the 47th U.S. president. And Trump has made the F-47 a personal priority.
The president -- who in news conferences and on social media has questioned Boeing's competence -- took the unusual step of announcing the F-47 contract in an Oval-Office press conference, marveling at the technology involved in Boeing's experimental version of the aircraft.
"There's never been anything even close to it from speed to maneuverability to what it can have to payload," Trump said. The aircraft is the "most advanced, most capable, most lethal aircraft ever built."
Write to Sharon Terlep at sharon.terlep@wsj.com
(END) Dow Jones Newswires
March 25, 2025 05:30 ET (09:30 GMT)
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