"I know where my money is betting," said Mike Gibbons, vice
president of F/A-18 Super Hornet and EA-18 Growler programs at
Boeing, told reporters after a U.S. Navy ceremony celebrating the
35th anniversary of the first flight of the original F/A-18 Hornet
at the headquarters of the Navy's aviation command.
"We have been extremely bullish about how much of a future we think
we have on Super Hornet and Growler production," Gibbons said,
noting that Boeing recently invested substantial amounts in new
tools to reduce the cost of building the airplanes at its facility
in St. Louis, Missouri.
The fighter is currently scheduled to end production in 2016. Boeing
and its backers have launched a major campaign pressing the U.S.
military to buy more Super Hornets at a cost of about $51-52 million
per plane, including engines, radars and electronic warfare
equipment, especially since the Navy's version of the Lockheed
Martin Corp <LMT.N> F-35 fighter will not be ready for combat use on
an aircraft carrier until 2019.
Production of fighter jets includes items like titanium that must be
purchased well before production begins, which means Boeing may have
to pay for those items itself until firm orders come in from the
Navy or foreign buyers to ensure that the planes can be built on
Boeing is also promoting foreign sales of the warplanes to Canada,
Denmark, Brazil, Malaysia, Kuwait and several other Middle Eastern
countries, but executives concede that there is no Navy budget for
more planes and several of the foreign competitions have been
Navy Captain Frank Morley, who runs the program for the Navy, told
reporters that top U.S. military leaders would decide the future of
the program over the next year.
"There is an ongoing conversation between this building and that
building," he said, adding that decisions about more orders would
depend on future Pentagon funding levels.
He said the Super Hornet's continued evolution from the Hornet had
been "a huge success for the Navy," adding payload, range, and
protections to help the plane survive attacks while keeping the
program on cost and schedule targets.
The Navy is now considering additional upgrades, including adding
form-fitted fuel tanks that could reduce drag and improve the
plane's range by up to 130 miles. Gibbons said he considered it a
given that the Navy would order more upgrades.
Morley said the Navy's current plan does not call for additional
purchases of F/A-18E/F Super Hornets or the EA-18G electronic attack
planes based on the same design. But his office had prepared options
for additional purchases if Pentagon leaders decided to fund them.
Randy Forbes, a key member of the House Armed Services Committee,
last week urged Defense Secretary Chuck Hagel to continue production
of the jets past 2016, given the impact on the industrial base if
the program ended.
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Gibbons said he was confident about additional sales from the U.S.
Navy and U.S. allies, noting that the Navy had not yet added funding
to its budget to start closing down production and preserve the
plane's tooling, a process that typically costs several hundreds of
millions of dollars.
He said Boeing was waiting to procure long lead items for additional
production until after it saw the Pentagon's fiscal 2015 budget
request, which in turn is dependent on whether U.S. lawmakers find a
way to avoid automatic across-the-board spending cuts required under
a process called sequestration.
He said Boeing could easily front the tens of millions of dollars
required for advanced procurement items until Congress passed a
budget allocating the funds, but said the company would not keep the
program alive unless new orders emerged.
"It will be a business-based decision. Boeing will certainly keep
the production line going as long as the U.S. Navy expresses their
desire to buy more jets," Gibbons said.
But he added, "It's obvious but we are not going to sustain the line
if ... there aren't going to be (more) customers."
Gibbons said the company was looking at ways to cut costs at the St.
Louis plant after 2016 by combining the production lines of the
F/A-18 Super Hornets and the F-15 fighter planes built on the
adjacent production line at the facility.
He said the company was also examining other options to continue
lowering the cost the planes, but said the per-plane cost would
likely increase by several million dollars if the Navy's next orders
came on a year-by-year basis instead of in a longer multi-year
Gibbons said he was confident that Navy and Pentagon leaders would
opt to buy more F/A-18s given remaining risks in completing
development of the F-35's carrier version.
"They're smart, pragmatic people ... who look at their best options
when they have to make those decisions, and they're flexible,"
Gibbons said. "There's a lot of jobs at stake."
Navy officials say the Boeing and Lockheed fighters are intended to
operate together for decades. But some F-35 backers worry that
budget-driven delays in Navy orders for the F-35 could unravel that
part of the F-35 program, especially if the Navy continues to buy
Boeing jets in the meantime.
(Reporting by Andrea Shalal-Esa)
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