US President Donald Trump has awarded Boeing the contract to manufacture the US Air Force’s most advanced fighter jet, providing the company with a significant victory.
The Next Generation Air Dominance (NGAD) program will succeed Lockheed Martin’s F-22 Raptor with a crewed aircraft designed to operate alongside drones in combat scenarios.
While the aircraft’s design remains classified, it is expected to incorporate stealth features, advanced sensors, and state-of-the-art engines.
Boeing’s shares rose by 5% following the announcement, as the Seattle-based firm secured the deal over Lockheed Martin, whose shares dropped by nearly 6%.
A crucial victory for Boeing
This win represents a turnaround for Boeing, which has faced challenges in both its commercial and defense sectors. It significantly enhances the company’s fighter jet production operations in St. Louis, Missouri.
The engineering and manufacturing development contract is valued at over $20 billion, with potential for the winner to receive hundreds of billions of dollars in orders throughout the contract’s multi-decade duration.
The NGAD initiative was envisioned as a “family of systems” focusing on a sixth-generation fighter to effectively counter threats from nations like China and Russia.
Donald Trump made the announcement regarding the contract award at the Oval Office today
Boeing’s commercial sector has encountered difficulties as it strives to ramp up production of its flagship 737 MAX jet, while its defense division has been plagued by underperforming contracts for mid-air refueling tankers, drones, and training aircraft.
Cost overruns in the KC-46 mid-air refueling tanker program have exceeded $7 billion in recent years, and another fixed-price contract to upgrade two Air Force One planes has resulted in a $2 billion loss for the top 5 US defense contractor.
Concerns for Lockheed’s future
Lockheed, which was recently removed from the competition to develop the Navy’s next-generation carrier-based stealth fighter, faces uncertainty in the high-end fighter market following this setback.
Although Lockheed could choose to contest the contract awarded to Boeing, Trump’s announcement during a prominent Oval Office press conference may lessen the likelihood of public disputes from the Maryland-based defense firm.
