A $4 billion contract for Navy fighter jets shows the strength of Boeing’s defense business even as the planemaker’s larger commercial unit grapples with global scrutiny of two crashes that grounded its best-selling airliner ever.
Covering 78 F/A-18 Super Hornets, the Wednesday award widens a winning streak that includes franchise projects such as an unmanned refueling drone and may drive military sales as high as $27.5 billion this year. It arrives at a critical time for the Chicago-based planemaker, which is facing congressional hearings into crashes of its 737 Max that killed more than 300 people in less than six months.
Transportation Secretary Elaine Chao asked her department’s inspector general this week to examine how the airliner, for which Boeing has won more than 4,600 orders, obtained Federal Aviation Administration approval for commercial flights. Her memo was sent just days after aviation safety officials in Canada and the U.S. joined their international counterparts in grounding the 737 Max amid reviews of crashes on March 10 in Ethiopia and Oct. 29 in Indonesia. While Boeing has maintained the airliner is safe, it ultimately backed the FAA’s decision.
“Safety has always been at the core of who we are,” Boeing commercial planes marketing chief Randy Tinseth, a one-time flight engineer, said at a conference in London on Thursday. “The safety of our airplanes, our customers, passengers, and their crews is really our top priority. The 737 Max builds on a legacy of delivery of more than 10,000 737s, an airplane that’s been in operation now close to 50 years.”
Commercial airplanes accounts for nearly two-thirds of Boeing’s annual sales, delivering revenue of $60.7 billion last year. Defense generated just $23 billion, though CEO Dennis Muilenburg said in January that broad support from the Pentagon and Congress would likely buoy sales further.
The manufacturer is now ramping up deliveries of the F/A-18 Super Hornet and the EA-18 Growler derivative, which make up the bulk of the Navy’s carrier air wing, and newer projects like the MQ-25 tanker drone and the T-X trainer for Air Force fighter pilots offer a long-term revenue stream of as much as $60 billion, Muilenburg has said.
Like other military contractors, Boeing has benefited from increased military spending under the Trump administration and is poised to take advantage of its emphasis on extraplanetary development and exploration. The latest Super Hornet contract stretches over three years, which Boeing said will help with production scheduling and save the Navy at least $395 million.
“A multiyear contract helps the F/A-18 team seek out suppliers with a guaranteed three years of production, instead of negotiating year to year,” Dan Gillian, vice president of the program, said in a statement. “It helps both sides with planning.”
