Orion Replacement Seen As Vital For Company's Military Image

The high profile award of the US Air Force's new aerial tanker contract to Northrup Grumman has been a public defeat for Boeing, but in the big picture, the company's military business is doing just fine.

Last week, Boeing announced first-quarter earnings that beat Wall Street projections. As he filled in the details, CEO Jim McNerney observed to the Seattle Post-Intelligencer that the company won nine of 11 major US military contract competitions last year. "Our hit rate has been very, very high," he said.

Among the programs succeeding in the shadow of the KC-X tanker controversy is the P-8A Poseidon, due for first deliveries to the US Navy next year. The plane is based on the 737, but will be supplied to the Navy equipped with bomb bay doors and weapon pylons under its wings. The planes will replace aging P-3 Orions which have been flying since the 1960s. Adm. Gary Roughead, chief of naval operations, calls the P-3, "tired iron."

The Navy wanted 100 planes, and Lockheed proposed supplying an updated P-3, but Boeing won the bid, and will provide 100 of the new, 737-based submarine hunters. The victory was good news after Boeing lost another Navy contract to Northrup last week, to supply 44 unmanned aerial vehicles for use in patrolling for surface ships. Those will be used in conjunction with the new P-8A manned aircraft.

The P-I observes that the P-8A, which will be the first military plane Boeing builds on a standard commercial assembly line, may be the last 737 variant built at the company's plant in Renton, Washington. By the time the last of the Navy's Poseidons are delivered, Boeing is expected to have started production on a replacement for the 737, which will likely be built in Everett.

The P-8A could also be the last fixed-wing plane Boeing builds for the military for quite a while. Richard Aboulafia of the Teal Group, an industry consulting firm, notes that Boeing's fighter production has peaked, and production of the C-17 transport is winding down. How the P-8A performs its missions dropping sonobuoys and detecting subs will determine, among other things, whether Boeing can sell the plane to other nations.

"This is pretty much it," Aboulafia said. "It better work, because Boeing has a lot riding on this in the fixed-wing market for military aircraft integration."

FMI: www.boeing.com, www.navy.mil