Bloomberg.com
September 5, 2002

Boeing Gets $4 Bln For Radar-Jamming Plane In New Navy Budget

By Tony Capaccio

Washington -- The U.S. Navy's revised long-term budget adds almost $4 billion for a new Boeing Co. radar- jamming plane and $900 million for a Boeing training plane the Navy said it was canceling, according to service documents.

The Navy wants to replace its aging fleet of carrier-based, radar-jamming planes with a modified version of the F-18E/F Super Hornet. The Navy seeks Pentagon approval to build 90 and would buy 65 through 2009, according to budget documents dated Sept. 3.

The Navy's $58.4 billion budget blueprint for aviation in fiscal 2004 through 2009 is about $8.8 billion more than the previous plan. The proposal is a boon to Boeing, the primary maker of Navy aircraft, which has seen its shares fall 28 percent in the last year because of a drop in commercial aircraft orders.

"This is great news for Boeing and the F/A-18 line because it solidifies a new version the Navy really wants and that the Pentagon is likely to approve as a short-term solution to improve its electronic combat capability," said Richard Aboulafia of the Teal Group, a defense market analysis firm.

The new aircraft program could be worth as much as $6 billion to Boeing if all 90 planes were purchased.

The new "EA-18G" would replace the EA-6B Prowler, the primary plane for detecting enemy anti-aircraft radar, then jamming it or destroying it with missiles -- a crucial defense against the loss of U.S. fliers.

The Navy's new plan also adds $900 million to purchase a total of 36 T-45 trainer aircraft from Boeing, with 15 in 2004 and 2005 and six in 2006. The Navy last year said it was terminating the program for lack of money.

'Making Hay...'

The Navy's increase in its budget shows it's "making hay while the sun shines because Navy aircraft carrier operations and aircraft have a lot of political support right now," Aboulafia said, referring to actions in Afghanistan.

"If we are going to fight outside the continent, we will need carriers especially because of the increased unreliability of Arabian region bases," he said.

The Navy's aircraft purchase plan requests $6.1 billion in fiscal 2004, or $700 million more than the current plan. The figure increases to $8.3 billion by fiscal 2006 -- or $100 million more. The proposed dollars jump to $14.6 billion by 2009, or $4.6 billion more than the current plan.

The Navy proposal must be approved by Pentagon civilian officials in a series of reviews beginning now and likely to last until December.

More Transport Planes

Boeing also benefits from $590 million added to buy six additional C-40 transport aircraft over the six already planned through 2009. The aircraft are modified 737 transports made in Seattle.

Boeing and teammate Textron Inc.'s Bell Helicopter unit suffered a setback on their V-22 Osprey program, which in May started two years of flight testing to correct safety and Reliability deficiencies. The Navy has cut its planned purchase through 2006 by 14 planes.

The Navy requests nine V-22s in fiscal 2004, four fewer than planned; eight in 2005, or seven less; 17 in 2006, or three less; and 29 in 2007, or two more than planned. The number would increase to 30 in 2008 and 33 in 2009, depending on the outcome of the test results.

Separately, the Navy added $900 million to its proposal to buy 21 KC-130J aerial refueling aircraft from Lockheed Martin Corp., starting with four in 2004.

Air Wings Merging

There has been a long-standing debate within the Pentagon over the Air Force and Navy commitment to three major aircraft programs -- the F-22, the F/A-18 and the Joint Strike Fighter.

The Navy now plans to cut the total of F/A-18E/F Super Hornets it planned to buy to 460 from 548 because it's merging its air wings with those of the Marine Corps.

The reduction won't take effect until fiscal 2006, when the Navy proposes cutting six aircraft and $321 million from its planned 50 fighters and $3.5 billion.

The Navy still plans to spend about $3 billion in fiscal 2004 and 2005 for 42 and 44 Super Hornets.

Assuming Pentagon approval, the Navy would buy the first four of the new Boeing radar-jammers in 2004, followed by 12 in 2007, 16 in 2008 and 33 in 2009 to be built in St. Louis, Missouri.

The new model is equipped with radar detection and jamming electronics made by Northrop Grumman Corp and BAE Systems PLC.