Boeing Secures $9.2B Deal for New US Air Force Training Jet

US planemaker Boeing Co. has been chosen to supply the US Air Force’s next-generation training jet in a deal worth as much as $9.2 billion.

Boeing partnered with Swedish aerospace company Saab AB to produce the new T-X training aircraft for the competition, bidding out US rival Lockheed Martin Corp. and Italian defense contractor Leonardo DRS. Boeing bid aggressively, as the Air Force’s cap for the tender was $16.3 billion.

This is a direct result of Boeing and Saab’s joint investment in making a system centered on the unique requirements of the Air Force, according to Leanne Caret, president and chief executive of Boeing defense business.

Seeking to replace its aging fleet of T-38 planes, which are almost 50 years old, the Air Force intends to buy 351 T-X jets and 46 simulators. Additional purchase options on the $9.2 billion arrangement could enable the Air Force to acquire up to 475 training planes and 120 ground-based training systems.

The T-38 replacement plan has been under development for 15 years now. General Arnold Bunch of the office of the assistant secretary of the Air Force for acquisition said two-thirds of what they train for the fighters in the fourth and fifth generation they are unable to do in the T-38.

Analysts stated that the purchase could eventually amount to 600 aircraft.

The service expects the first jets to arrive at Joint Base San Antonio-Randolph, Texas, in 2023 with the program to complete in 2034.

Aiming to Win Defense Contracts

The Air Force’s award for Boeing’s T-X trainer program marks its third major victory in about a month, following an $805 million contract to produce the Navy’s first four MQ-25 unmanned tankers, and deal worth $2.38 billion to develop the Air Force’s Huey replacement helicopter.

In its bid, Lockheed had offered a modified T-50 training jet built jointly with Korea Aerospace Industries Ltd., while Leonardo had presented the T-100, a modified model of its M-346.

Winning the deal is important for Boeing, which reorganized its defense business more than a year ago in an effort to achieve a franchise level victory like the trainer.

Boeing had struggled to pull off enormous defense contracts, but with the help of Caret, the company was able to land more deals.  

The T-X trainer program initially was to cost approximately $19.7 billion, and that Boeing’s bid cut $10 billion of that amount.

Shares of Boeing gained 0.9 percent to $370.89 after the news.

Saab said more than 90 percent of Boeing’s T-X production will be built in the US, supporting over 17,000 jobs across 34 states. The $9.2 billion figure for the new agreement come into play if the Air Force proceeds with purchasing 475 jets.

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