Author Topic: For Boeing Defense, it's fight where you can  (Read 173 times)

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For Boeing Defense, it's fight where you can
« on: December 04, 2013, 12:10:45 AM »
Boeing is nothing if not resilient. One month after receiving a black eye when South Korea decided not to select the F-15 Silent Eagle for its 60-aircraft F-X III requirement, the US airframer changed tack, pitching an aircraft it dubs the “Advanced F-15” at October’s Seoul air show.

That shift may prove to be a winning move, despite South Korea subsequently selecting the Lockheed Martin F-35A to replace its fleet of obsolete McDonnell Douglas F-4 Phantoms. That order will be for 40 of the fifth-generation aircraft for delivery from 2018, with an option for another 20. However, there are still another 20 aircraft to play for, which in today’s world of tight defence budgets is a huge fighter contract.

Believed to be in the frame for this non-stealth part of the package are the F-X III contenders Eurofighter and F-15 – and Boeing’s evident price advantage may well swing the deal. The “Advanced F-15” lacks the canted tails and conformal weapon bays of the Silent Eagle, which was already the only F-XIII bid to come in under Seoul’s original budget.

Take the long view

Speaking at the Boeing chalet at the Seoul show, Boeing Defense, Space & Security (BDS) vice-president of business development Chris Raymond described Seoul’s decision not to buy the Silent Eagle as disappointing. However, he stressed the company’s eagerness to continue working with a valued long-term customer. “We’ve sold a lot of products to South Korea, so we take a long view of this market. We’re staying focused on the fact that they have a legitimate shortfall in combat capability and they are trying to fill it with the F-X III procurement,” he says.

And despite the setback for Boeing in South Korea and defence cuts at home, Raymond is cautiously confident about the future of BDS’s defence business. While realistic about the prevailing budget environment, he notes a number of major programmes on the near-horizon where Boeing is bound to be a fierce competitor.

“There is no doubt that business is challenging. Our view is to increase the capability of existing platforms, and to fight the competitions where you can fight them. There are some future tactical air programmes that are out there, whether they are [the Unmanned Carrier-Launched Surveillance and Strike Program], USAF trainers or long-range strike systems. Clearly we’ll look to compete for those things as the next chapter,” he adds.

Still, Raymond feels the sequestration levels of the US defence budget are here to stay, and that this will have a profound impact on future programmes. He believes the fastest way for the Department of Defense (DoD) to realise short-term savings is by hitting areas such as research and development and operations, which will have a major impact on defence contractors. Savings in areas such as personnel and infrastructure, on the other hand, will take longer to realise.

Boeing is clearly banking on international sales to help offset weakness in defence spending at home. Despite being a highly conservative – even cautious – organisation, Boeing is building 13 C-17 strategic transports without firm orders, maintaining the type’s assembly line out to 2015.

Raymond declined to comment on potential customers for these “white tail” aircraft, but said that Boeing hopes to make an announcement in the “next six to seven months”.

Where’s the bottom?

India, which recently received its fourth C-17 of a 10-aircraft order, is believed to be interested in six additional examples. Some observers have also viewed Singapore as a potential candidate for the type, with a possible requirement for five aircraft.

“I’m not sure if the current sequester environment is a floor or a ceiling, but I think our view has been that the sequester budget level is reality, and that the sequester level of the budget is more representative of the budget going forward,” says Raymond.

“[Some 20-25%] of Boeing defence revenue is international,” he says, “and the goal is 30%. We’re definitely going into a downturn in US defence spending.

“The question is when will we hit the bottom – and how long will we be there?”

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