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Pentagon to Boeing: Get Real!

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I'll give Secretary of Defense Bob Gates this much -- he's no Alan Greenspan, mumbling and grumbling through Congressional hearings one day, then recanting his every belief the next.

No, Mr. Gates is a clear talker and a straight shooter. And yesterday he hauled off and smacked Boeing (NYSE: BA  ) upside the head with a hard frying pan full of reality: The F-35 is coming. Get used to it.

35 is greater than 18
In recent months, Boeing's been talking up a perceived problem with the handoff from every other U.S. fighter jet to Lockheed Martin's (NYSE: LMT  ) jack-of-all-trades F-35 Lightning II. (And it's not the only one. Goldman Sachs (NYSE: GS  ) has been sniping from the sidelines as well.) Boeing warns that the U.S. Navy faces a critical shortage of fighter jets in the near future: As older jet models are phased out, hundreds of plane-slots on U.S. aircraft carriers will stand empty while we wait for Lockheed to produce the F-35s to fill 'em. With the first full training squadron not due to touch down until 2011, something must be done.

Boeing's solution: Buy Boeing F/A-18s to fill the gap.

Settle down, Boeing
Think twice, says Gates. In fact, the worst-case scenario is that in 2018, we will have a temporary shortfall of about 100 carrier-based aircraft while awaiting deliveries of the necessary F-35s. And even that may not be so bad. As Gates points out, the fifth-generation F-35 is more capable than the fourth-gen fighters it replaces, and won't need to "fill the gap" on a one-to-one basis. Additionally, as unmanned aerial vehicles take over more and more of the duties of piloted aircraft, the supposed "shortfall" could dwindle to as few as 40 planes -- fewer than one-half of one aircraft carrier's fixed wing complement.

So ... so much for Boeing's main argument. But it isn't all bad news for Boeing. For one thing, archrivals EADS and Northrop Grumman (NYSE: NOC  ) seem intent on throwing the company the KC-X Tanker contract without a fight.

As a second consolation prize, Gates dispatched his aide-de-camp Admiral Mike Mullen to confirm the Navy's intention to purchase multiple Boeing EA-18G "Growlers." Over time, Growler revenues could rise to $6.4 billion in value, parceled out to Boeing and key subcontractors Raytheon (NYSE: RTN  ) and General Electric (NYSE: GE  ) .

Last but not least, Gates held out hope that a long-awaited next-gen bomber aircraft is still in the works. Although the plane per se won't arrive before "the late '20s," development funds could begin flowing as soon as next year, surging to $4 billion over the next five years.

And great news for Boeing: Now that the F/A-18 is off the table, it'll have a whole lot more free time to work on the bomber.

Fool contributor Rich Smith does not currently own any stocks named above. The Motley Fool has a disclosure policy.

Read/Post Comments (5) | Recommend This Article (7)

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  • Report this Comment On February 04, 2010, at 6:43 PM, RonsThoughts wrote:

    Well if the F-18 isn't good enough for them, then maybe gates is falling into a Boeing trap by admitting more unmanned aerial fighters, UAF, are needed that will compliment the F35's. The UAF has amazing G-forces, turns on a dime, much higher than a human can take in the F35 -- Boeing is the leader in that technology...

    The good thing about that is now that Gates is on record for saying that, he will have to back up his claim to depend on more unmanned aerial vehicles by complimenting the F35 with the UAF's. The UAF may end up being the pilots wingmen who are cozily sitting at their desk drinking coffee while the only human in harm's way is the pilot flying the F - 35.

    See March 2010 issue of Popular Mechanics.

  • Report this Comment On February 04, 2010, at 6:48 PM, TMFDitty wrote:

    Good point.

    I was thinking along the same lines. Even if the F-35 doesn't replace the fourth-gen fighters on a one-to-one basis, if Gates is right that eight Predators can do the work of 36 F-16s, it seems logical that eight Predators could also replace, say, 18 F-35s -- and at a whole heckuvalot cheaper price.

    It makes a Fool wonder: When will the next shoe drop?


  • Report this Comment On February 04, 2010, at 8:36 PM, bigtruckseries wrote:

    Lockheed Martin is the biggest case of corporate welfare I've ever seen.

    The Pentagon was smart to cancel the RAH66 Comanche.

    The Pentagon was even smarter to cancel orders of the F22.

    Now we have the f-35 which is where LM is going to try and make back all the money they lost on the F22 orders by increasing the cost per unit of the F-35.

    First, there is no country in the world to fight with jets this sophisticated. The F-16/ F-18 are plenty powerful enough and upgrades to their technology make them even more efficient.

    Secondly, Predator Drones are cheap, and far more effective. Just 8 of them do the equivalent job as 35 F-16's.

    Thirdly, the F-35 is a FAILURE. While the conventional takeoff versions are just "OK", the VTOL version is a complete failure and far too sophisticated (i.e: too many moving parts) versus too little armament carriage to make it worth $300 BILLION DOLLARS.

    Stealth aircraft are easy to build...the problem is the price gouging and the LIES the corporations tell to the consumers about how cheap they are suppossed to be so long as you order 10,000 units.

  • Report this Comment On February 04, 2010, at 11:44 PM, eric1palmer wrote:

    Unfortunately the F-35 Just So Farcical program is built on spin and soophistry.

    Do a search for this article that appeared today in AV WEEK

    F-35 Faces A Troubled 2010

    The Joint Strike Failure is a failure, they just haven't figured out how to bury it yet. Some of the cheer leaders are a little slow on the trouble this program has.

  • Report this Comment On February 05, 2010, at 5:26 PM, ByrneShill wrote:

    I don't know why Gates said that 8 predators could do what 35 F-16s can do, but this is just not true. Not saying the F35 or the F22 are the greatest invention since sliced bread, I'm not even saying the current state of the world justifies spending a single penny on them, but 8 preds are no match for 35 F16, no matter what kind of mission we're talking about, period.

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