Boeing won the dispute to develop the new Pentagon’s next generation fighter, surpassing Lockheed Martin. The contract has a significant impact on the company’s financial results, its fragile defense division and its relationship with the Trump administration.
The new fighter will replace Lockheed’s F-22 and will be designed to operate with semi-autonomous drones already at an advanced development stage. The Pentagon has not disclosed cost estimates for the program, but experts estimate that research, development and acquisition spending may exceed US $ 50 billion.
For Boeing, the contract represents a relief for its defense division, which is responsible for about one third of the company’s revenue, but has accumulated billions of dollars in losses in recent years due to deficit contracts. Many projects in the area of defense and space have suffered from budget bursts, delays and other problems.
In recent years, Boeing has lost important competitions for US government programs. Since taking over in November, CEO Kelly Ortberg has sought to reformulate the company’s bidding process to try to reverse these losses.
The contract also signals a government’s vote of confidence in a company that faces a series of crises. President Trump and Elon Musk publicly criticize Boeing for delays in replacing Air Force One and budget overflows on military projects.
At the same time, the company negotiates an agreement with the Justice Department (DOJ) related to the two fatal accidents of 737 MAX and needs approval by the Federal Aviation Administration (FAA) to expand the production of its 737s, an essential step in recovering profitability.
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For Lockheed Martin, defeat is another setback. Its actions have been falling in the last six months, and the company has been looking for new contracts to reduce dependence on F-35 fighter, affected by delays, costs and design and software problems.
Source: Dow Jones Newswires.
