Al Root
Boeing scored an upset win in its battle with Lockheed Martin to build the next-generation jet fighter for the Air Force. Now, the Navy's decision is due, and Boeing is going for two in a row.
According to Reuters, the Navy is expected to announce its decision for a sixth-generation fighter this week. That timeline puts the decision about a week after President Donald Trump announced that Boeing would build the Air Force's F-47 jet fighter.
The new jets will be sixth-generation fighters. Generations refer to the technology and capabilities of certain planes; the F-35 and F-22 are fifth-generation fighters. Russia and China have fifth-generation fighters, and China has shown what appears to be a prototype of a sixth-generation jet.
More advanced jets have better weapons, software, maneuverability, and improved stealth technology. They are also expensive. The F-35 can cost more than $100 million to purchase, and another $500 million to $700 million to maintain and operate over its multidecade service life.
Lockheed isn't bidding on the Navy program, according to Wall Street. Boeing is facing off with Northrop Grumman. The Air Force decision has Northrop investors a little nervous. Shares initially dropped on Friday after the Boeing win was announced, but Northrop shares recovered to end the day with a gain.
Coming into Tuesday trading, Lockheed stock was down almost 7% since the Air Force decision. Seaport Global analyst Richard Safran doesn't see a significant threat to Lockheed from the decision. It makes the F-35, and that jet won't be supplanted by the F-47. Over time, thousands of F-35s will be delivered, compared with hundreds of F-47s. Still, he says the win is good news for Boeing, with Safran estimating $120 billion to $150 billion in F-47 revenue over the multidecade life of the program.
"Not the outcome we expected," wrote Safran in a recent report. He thought Lockheed would win the Air Force contract and Boeing would win the Navy contract. "We think it's possible, but unlikely, the Pentagon awards two fighter programs to Boeing, implying Northrop wins [the Navy business]."
Maybe that gives the edge to Northrop. Investors will just have to wait to find out.
Boeing stock was up 0.3% in premarket trading at $181.43, while S&P 500 and Dow Jones Industrial Average futures were up 0.1%.
Shares might also be impacted on Tuesday by a potential decision to withdraw a plea agreement related to the two tragic 737 MAX crashes in 2018 and 2019.
The Wall Street Journal reported the development on Monday. Boeing declined to comment.
Boeing entered into a deferred prosecution agreement in 2021 over the incidents and agreed to pay more than $2 billion in fines. The agreement was voided in 2024 after the Justice Department claimed the 737 MAX-9 emergency-door-plug blowout showed Boeing hadn't taken the required steps to improve its business processes.
In December, a judge rejected a new plea deal, sending Boeing and the Justice Department back to the drawing board. Any new agreement could mean more fines for the company. Boeing might be looking to minimize additional fines under a new presidential administration.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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March 25, 2025 08:34 ET (12:34 GMT)
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