{"id":153216,"date":"2025-03-24T07:25:21","date_gmt":"2025-03-24T07:25:21","guid":{"rendered":"https:\/\/peraltafinancing.com\/airbus\/boeings-new-fighter-award-moves-away-from-money-losing-fixed-price-contracts\/"},"modified":"2025-03-24T07:25:21","modified_gmt":"2025-03-24T07:25:21","slug":"boeings-new-fighter-award-moves-away-from-money-losing-fixed-price-contracts","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=153216","title":{"rendered":"Boeing’s new fighter award moves away from money-losing fixed price contracts"},"content":{"rendered":"


\n<\/p>\n

\n

By Scott Hamilton<\/strong><\/p>\n

March 24, 2025, \u00a9 Leeham News:<\/strong> Boeing\u2019s major win for the US Air Force\u2019s new F-47 sixth-generation fighter isn\u2019t just a major plus for a company under siege since 2019. It\u2019s a major shift in its defense and space contracting that moves away from fixed price contracting, costing it billions of dollars during the past two decades.<\/p>\n

\"\"<\/a><\/p>\n

Boeing\u2019s new F-47 fighter. Credit: US Air Force.<\/strong><\/p>\n<\/div>\n

An Air Force official told LNA<\/em> that the contract is a cost-plus-incentive-fee award for \u201cEngineering and Manufacturing Development. \u201d The contract will mature, integrate, and test all aspects of the NGAD Platform (Next Generation Air Dominance), the official said. The contract will produce a small number of test aircraft, which will be used for testing. The contract also includes competitively priced options for Low-Rate Initial Production aircraft.<\/p>\n

Boeing\u2019s Defense, Space, and Security unit entered into a series of fixed-price contracts that have been plagued by cost overruns. The KC-46A aerial refueling tanker cost more than $7bn over the fixed-price contract. Converting two passenger model 747-8s into the new Air Force One cost more than $3bn. The MQ-25 unmanned Navy refueling drone, T-7 Red Hawk fighter trainer, and Starliner space capsule, among other defense programs, add up to billions of dollars more cost overruns on fixed-price contracts.<\/p>\n

The F-47 is Boeing\u2019s first all-new fighter contract with the Air Force. Its current fighter programs pre-date the 1997 merger with McDonnell Douglas Corp.<\/p>\n

A shot in the arm<\/strong><\/h5>\n

The award is a major boost for the beleaguered Boeing. Boeing Commercial Airplanes has been in crisis mode since March 2019, when the leading money-maker 737 MAX was grounded for 21 months. The Federal Aviation Administration continues strict oversight of MAX production. Boeing hopes to hit a rate of 38\/mo later this year.<\/p>\n

In October 2020, deliveries of the 787 were suspended for 20 months after production flaws were discovered. The last of the rework on planes that were produced was completed last month. Boeing still is struggling to return production to a target of 10\/mo.<\/p>\n

Boeing and the rest of the aerospace industry continue to be affected by lingering impacts stemming from the COVID-19 pandemic. The company reported its worst loss in 2024 in its history.<\/p>\n

The award was put into perspective by aerospace analysts.<\/p>\n

Goldman Sachs noted, \u201cThis award comes at a pivotal time for Boeing, as it has not been awarded the prime contractor role on a US fighter jet in decades. Long-term growth in its defense segment had been a question, along with substantial recent cost overruns on other development programs.<\/p>\n

\u201cBoeing is on record that it would not take on another fixed price development program and it recognized the importance of conservative contract terms. The loss for Lockheed means it will continue to face the question of what comes behind the F-35, which has grown to ~25% of earnings.\u201d<\/p>\n

RBC Capital called the contract \u201ca bit of a surprise for investors. We believe the award is a signal from the Air Force that it wants to ensure at least two fighter companies in the industrial base. \u00a0Lockheed Martin produces the F-35. Northrop Grumman is the contractor for the new B-21 bomber.<\/p>\n

Contract execution will be watched<\/strong><\/p>\n

\u201cWe believe focus on Boeing will remain on execution, as Boeing\u2019s recent struggles across its commercial (MAX & 787) and defense (KC-46 Tanker, T-7A, space programs) portfolios,\u201d RBC wrote. This \u201ccould suggest further execution risk on the F-47.\u201d<\/p>\n

The Air Force did not disclose the estimated cost of the entire F-47 procurement. But RBC wrote that \u201cthe engineering and manufacturing development contract is worth over $20bn, with the program worth several times more than this over the contract\u2019s lifetime.\u201d RBC estimates the unit cost of the F-47 is around $300m.<\/p>\n

Engine selection for the F-47 is pending.<\/p>\n

\u00a0<\/p>\n

Related<\/em><\/h3>\n<\/p>\n

\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"

By Scott Hamilton March 24, 2025, \u00a9 Leeham News: Boeing\u2019s major win for the US Air Force\u2019s new F-47 sixth-generation fighter isn\u2019t just a major plus for a company under siege since 2019. It\u2019s a major shift in its defense and space contracting that moves away from fixed price contracting, costing it billions of dollars […]<\/p>\n","protected":false},"author":1,"featured_media":153217,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12027],"tags":[4096,13389,19800,2513,5927,63633,11379,1924],"dealstore":[],"offerexpiration":[],"class_list":["post-153216","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-airbus","tag-award","tag-boeings","tag-contracts","tag-fighter","tag-fixed","tag-moneylosing","tag-moves","tag-price"],"yoast_head":"\nBoeing's new fighter award moves away from money-losing fixed price contracts - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=153216\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Boeing's new fighter award moves away from money-losing fixed price contracts - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"By Scott Hamilton March 24, 2025, \u00a9 Leeham News: Boeing\u2019s major win for the US Air Force\u2019s new F-47 sixth-generation fighter isn\u2019t just a major plus for a company under siege since 2019. 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