Boeing was selected to build the US Air Force’s next training jet in a contract worth up to $9.2 billion over the life of the program, the Air Force said.
Boeing teamed up with Sweden’s Saab AB to develop a new aircraft for the competition, beating out Lockheed Martin Corp and Leonardo DRS.
The Air Force currently plans to purchase 351 of the jets and 46 simulators. Additional purchase options on the $9.2 billion contract, first reported by Reuters, could allow the Air Force to buy up to 475 jets and 120 simulators.
The service expects the first jets to be delivered in 2023 with the programme to reach full operation in 2034.
In its bid, Lockheed had offered a modified version of its T-50 training jet developed jointly with Korea Aerospace Industries Ltd while Italy’s Leonardo DRS offered the T-100, a modified version of the Italian aerospace company’s M-346.
Boeing shares edged higher after the news, to close up 0.6% at $367.38, while shares of Korea Aerospace fell more than 24% in Seoul. The company said its group lost because Boeing’s bid was lower.
The Air Force wants to replace its aging fleet of T-38s, nearly 50 years old. Analysts said it could eventually buy up to 600 aircraft.
General Arnold Bunch of the office of the assistant secretary of the Air Force for acquisition told reporters “two-thirds of what we train for the fighters in the fourth and the fifth generation we actually can’t do in the T-38.”
Winning the contract is significant for Boeing, which reorganised its defence business more than a year ago in the hopes of a “franchise level” victory such as the trainer.
Landing big defence contracts had been difficult for Boeing, but Leanne Caret, chief executive of Boeing’s Defence, Space & Security since February 2016, has helped the company win more contracts.
“Today’s announcement is the culmination of years of unwavering focus by the Boeing and Saab team,” Caret said in a statement. “We expect T-X to be a franchise programme for much of this century.”
The award from the Air Force comes after Boeing had trouble delivering its new in-air refuelling jet, the KC-46, to the air force.
In a statement Saab said the award means Boeing can begin placing orders with suppliers, including Saab, but has not done so yet. Saab said more than 90% of Boeing’s offering will be made in America, supporting more than 17,000 jobs in 34 states.