Boeing Fighter-Jet Sales Advance Toward Final Approval
19 November 2016
Boeing Co. moved closer to extending the life of its combat-jet production lines with the State Department’s approval of sales to Kuwait and Qatar worth up to $31.2 billion combined.
With that barrier cleared Thursday, the long-delayed deals now go before Congress for final approval. Lawmakers have already been informally briefed, allowing the Pentagon and Boeing to press ahead with completing terms for the government-to-government transaction.
Qatar wants to buy as many as 72 Boeing F-15 fighters that together with weapons and support could be worth $21.1 billion, the Pentagon said. However, Qatar could still split any buy between Boeing and the Eurofighter Typhoon jet.
Kuwait wants 32 Boeing F/A-18 jets at a cost of $10.1 billion, including weapons and support systems, the Pentagon said. Kuwait signed a deal earlier this year with Leonardo SpA to buy 28 Typhoons.
Middle Eastern countries’ interest in combat jets comes despite budget pressure from falling oil prices, the main source of revenue for countries such as Saudi Arabia and Kuwait.
Boeing faced having to shut down the St. Louis, Mo., production lines for both jets by the end of the decade unless it secured export deals. It is also trying to sell more F/A-18s to the U.S. Navy, but the U.S.—as it shifts to the Lockheed Martin Corp. F-35—won’t buy any more F-15s as it.
Chicago-based Boeing also is trying to sell the F/A-18 to India, a deal that could require it to build the planes there.
Leanne Caret, head of Boeing’s defense unit, has made waves inside and outside the company by saying its decadeslong history of producing fighters is likely to end in the early 2020s.
Orders for its F-15 and F/A-18 jets have been drying up for years, forcing production to slow, but Ms. Caret is the first Boeing executive to face a future without fighter production as a centerpiece of the unit’s strategy. Her plan is to replace sales revenue by doing more repair and upgrade work on the hundreds of its jets already flying.