Agence France Presse October 29, 2001
Investors strike Boeing after lost jet deal
By David Williams
Investors punished Boeing on Monday, sending its stock into a steep dive after it lost a fight for the richest-ever warplane contract to rival Lockheed Martin.
On a falling Wall Street, Boeing stock plunged 3.93 dollars, or 10.43 percent, to 33.75 dollars. Its market capitalization fell 3.14 billion dollars to 26.93 billion dollars. But Boeing may yet win some crumbs in the form of subcontracts from Lockheed for the new single-engined Joint Strike Fighter (JSF), to be made in versions for the Navy, Air Force and Marines, experts said.
And it is likely hoping for much more as it researches a pilotless fighter for the future, which could affect the latter end of the 30-40 year JSF program, they said. Lockheed Martin, which had been expected to win the contract, fell a modest 92 cents, or 1.84 percent, to 49 dollars. Wall Street's Dow Jones industrials tumbled 2.89 percent.
The JSF contract, worth 18.98 billion dollars in the initial stage, could grow to more than 200 billion dollars, the Pentagon said. Experts said it could be worth 400 billion dollars when foreign sales are included. "Obviously, the loss of the JSF is a loss of opportunity for the company (Boeing) for the long term," said Moody's Investors Service aviation analyst Tassos Philippakos.
It was unclear whether Lockheed might give some work to Boeing, he added, noting that the winning firm already had partners in the bid -- Northrop Grumman and BAE. "It would be beneficial to Boeing if they get some participation, of course," he added. Longer term, the outlook was unclear.
"I think it is reasonable for us to expect that the JSF may be the last manned (fighter) aircraft to be produced," he said. "The generation after that may, and I stress may, be unmanned."
Paul Nisbet, an analyst for JSA Research Inc in Newport, Rhode Island, said Lockheed Martin might give work to Boeing although it would look after its contract partners first. If Boeing could develop an unmanned fighter in time, however, it could steal away orders for the JSF in the longer-term, he said. "I am sure that is Boeing's objective."
Boeing would need to develop a cost-competitive unmanned aircraft, more maneuverable because of its capacity to withstand far greater gravity forces, Nisbet said. "If they can do all those things then they will certainly eat into the JSF contract," he added.
John Pike, director of Globalsecurity.org, a nonpartisan think-tank in Washington, agreed. "One could very easily imagine the JSF program getting substantially truncated because UCAVs (unmanned combat aerial vehicles) turn out to be able to do everything JSF can," Pike said.
Meanwhile, the JSF may affect sales of the Eurofighter Typhoon, a swing-role combat aircraft developed by Germany, Italy, Spain and Britain, which is set to enter service in 2002. The four partner nations have ordered 620 aircraft whilst Greece has committed to a further 60 aircraft.
"If this aircraft (the JSF) can be produced as cheaply as is planned, which never happens, then it would be a highly-competitive aircraft," Nisbet said. The larger, twin-engined Eurofighter was basically going after the same market, but at a higher price than was being planned for the future JSF, he added.
"If you want a lot of firepower without breaking the bank, as would be the case in most foreign sales, then a plane like the JSF would be a very popular plane just like the F16 has been." Under the current schedule, the first production versions of the JSF will roll off the lines in 2008.
Copyright 2001 Agence France Presse
