March 1, 1998 in Nation/World

Boeing Aims To Become ‘Top Dog’ Mcdonnell Deal Catapults Boeing To Elite Ranks Of Fighter Jet Makers

James Wallace Seattle Post-Intelligencer
 

Thanks to its merger last year with McDonnell Douglas, The Boeing Co. looks to be “top dog” in the growing international market for military fighters over the next decade, according to a new report.

A total of 3,369 fighters, attack planes and trainers valued at about $100.8 billion are expected to be produced in the next 10 years, said the report by Forecast International/DMS, which provides marketing forecasts for various industries, including aerospace and defense.

“While Boeing’s recent acquisition of McDonnell Douglas undoubtedly served as a rude wake-up call for Europe’s Airbus Industrie, it also thrust the Seattle-based manufacturer into a top-dog slot in the helicopter and military aircraft sectors,” the report noted. “The ‘new’ Boeing is projected to rank first among the fighter/attack/jet trainer manufacturers during the next 10 years based on sales revenue, with a 19.5 percent share.”

Because of the recent consolidation of the U.S. defense industry, Boeing and Lockheed Martin are the only remaining makers of fighter planes in this country.

But they face growing competition from Europe, where the next generation Eurofighter, built jointly by the United Kingdom, Germany, Italy and Spain, will soon go into production. Those countries recently signed contracts worth up to $52 billion to build the first 148 of a total of 620 warplanes to be delivered beginning early in the next decade.

The report said global demand for new fighter aircraft will grow as countries that delayed buying war planes immediately after the end of the Cold War are now planning to modernize their forces.

“The primary market motivator, however, is a major re-equipment cycle beginning to shape up in the United States and western Europe,” the report said.

Boeing builds the Navy’s F-18 Hornet and the Air Force’s F-15, as well as the T-45 Goshawk jet trainer.

Boeing also has a multiyear military contract to convert the AV-8B Harrier jump jets into a more advanced model.

And Boeing recently started low-rate production of a more advanced version of the F-18 known as the Super Hornet. The Navy plans to buy as many as 750 Super Hornets.

Lockheed Martin builds the F-16, which is also used by the Air Force.

Both Boeing and Lockheed Martin are jointly building the country’s newest fighter, the stealthy F-22, but it is in flight testing and several years away from the start of production.

The two companies are competing for the Joint Strike Fighter (JSF). That contract could be worth upwards of $200 billion when foreign sales are included. The Pentagon will pick the winning design in 2001. Plans call for the U.S. military and the Royal Navy to acquire up to 3,000 of the fighters.

“Assuming the program meets its performance goals, the multi-role JSF could find a very lucrative international market and may approach the success achieved by Lockheed’s F-16,” noted the Forecast International report.

Boeing and Lockheed Martin are battling hard for emerging fighter markets in Asia, Eastern Europe and in Latin America.

Defense industries in the Czech Republic, Hungary and Poland, which have been invited to joint NATO, are considering the purchase of modern fighters to upgrade their forces. Each is considering Western and Russian models, including the French Mirage 2000, Lockheed Martin’s F-16, Boeing’s F-18, Sweden’s JAS 39 Gripen and the Russian-made Mig-29.

Although the financial crisis in Asia has clouded the once-bright fighter market in that region, Boeing and Lockheed Martin stand to gain from a recent decision by the Clinton Administration to lift the embargo of U.S. fighters to Latin America.

The first big opportunity could be Chile’s competition for a new fighter. Boeing’s F-18 and Lockheed Martin’s F-16 are both in the running, as are the Mirage and the Gripen.

Aerospace sources have told the Post-Intelligencer that Chile may be about to buy eight Boeing F-18’s that were to be delivered to Thailand. The Royal Thai Air Force can no longer afford to pay for the planes because of the country’s financial problems.

If Chile buys the fighters, it would be seen as a significant coup for Boeing in its efforts to establish itself in the Latin America fighter market, and a tremendous upset to Lockheed Martin and European fighter manufacturers.


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