U.S. Navy moving ahead with Boeing multiyear deal

By Andrea Shalal-Esa

WASHINGTON (BestGrowthStock) – The U.S. Navy plans to proceed with a multiyear deal to buy 124 Boeing Co (BA.N: ) F/A-18 fighter jets after securing a 10 percent price cut that satisfied top Pentagon leaders, sources familiar with the decision said on Thursday.

The Navy is due to send documents explaining the multiyear agreement, which is expected to cost about $5.3 billion in total, to Congress in coming days, said the sources, who were not authorized to speak on the record.

That amounts to a per-plane price in the low $40 million range for each fighter, excluding government furnished equipment, said one source. Including that equipment, the price per plane will be about $50 million, well below the $57 million price listed on a Navy website about the twin-engine fighter.

Boeing and its backers in Congress have been pushing for another multiyear contract because it gives the company a more stable funding source and shores up jobs in local economies.

This agreement would secure the St. Louis production line of the fighter — which Boeing is also aggressively marketing overseas — through fiscal year 2013.

The deal also gives the Navy a fallback option if more problems arise with the next-generation F-35 fighter being built by Lockheed Martin Corp (LMT.N: ) to replace older model F/A-18s and other fighter jets.

The Pentagon this year restructured the $300 billion Lockheed program, pushing back by two years the date at which the Navy will be able to start operating the new planes.

“It does keep leverage on Lockheed,” said one congressional aide who is closely tracking the Navy’s talks with Boeing.


(Reporting by Andrea Shalal-Esa; Editing by Tim Dobbyn)

U.S. Navy moving ahead with Boeing multiyear deal