Please ensure Javascript is enabled for purposes of website accessibility

Could Boeing Win this Dogfight?

By Rich Smith – Updated Apr 6, 2017 at 9:42PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Lockheed's F-35 is "only as good" as an F-18.

"There are those that see JSF as the last manned fighter. I'm … inclined to believe that." -- Admiral Mike Mullen, chairman of the US Joint Chiefs of Staff

It's been a couple years since Admiral Mullen declared Boeing's (NYSE: BA) fighter-building days ended. The JSF -- aka the F-35 Lightning II -- is Lockheed Martin's (NYSE: LMT) baby, so its coronation as our "last" fighter jet implies Boeing will never get a chance to sell another warplane. Don't believe it. The more we learn about the F-35's performance, the less I think we can count Boeing out. 

"Just as good as an F/A-18"
The F-35's "B" variant is currently undergoing flight tests with the Marine Corps. DefenseNews.com gives us a progress report: "There are some subtle differences in maximum turn rates and some slight differences in where corner airspeeds are exactly [the same]." But overall, the F-35 bears a close resemblance to the F/A-18 Hornet. Quite similar in all but two respects:

First, price. Long-term, the Pentagon hopes to bring the average cost of a generic F-35 down to $80 million per plane, but flyaway costs on the F-35B are running $150 million apiece today.  As I pointed out last year, Boeing's price concessions are likely to squeeze profits at the aerospace giant.  But these sacrifices may be worth it.

The reason is our second point: Stealth. If Lockheed's F-35 basically duplicates the F/A-18 Hornet … why does it cost more than three times as much? The obvious answer is that the F-35 pairs F/A-18 aerodynamics with F-117 stealth capabilities. It's a much more "survivable" airplane. But does every plane in the Air Force, Navy, and Marines really need to be stealthy? When most of these planes are bombing caves and strafing pirates, in countries where the most serious anti-aircraft threat is an AK-47 pointed at the sky?

Seems a bit overkill. Seems a bit expensive for a military that's being asked to cut $1 trillion from its budget. And it seems to me this gives Boeing an opening to sell a few F/A-18s. After all, in some respects, they're "just as good" as the F-35...

Will Pentagon budget cuts give Boeing an opening here? Add the stock to your Fool Watchlist and find out.

Fool contributor Rich Smith does not own shares of any company named above, but The Motley Fool owns shares of Raytheon, Lockheed Martin, and Northrop Grumman. The Motley Fool has a disclosure policy. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Boeing Company Stock Quote
The Boeing Company
BA
$131.26 (-5.37%) $-7.45
Lockheed Martin Corporation Stock Quote
Lockheed Martin Corporation
LMT
$413.07 (-2.13%) $-9.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.