On the U.S. Navy’s wish list: More Boeing fighter jets

Aero India 2007 Air show and VIP Flights, F/A-18F Super Hornet MSF07-1693-### 2/4/2007

As the F-35 Joint Strike Fighter program continues to accrue criticism over cost and schedule overruns and missed milestones, the U.S. Navy is looking to an old standby—the Boeing-built F/A-18 Super Hornet—to plug potential holes in its airborne fleet. The Navy’s unfunded “wish list,” headed to lawmakers’ desks this week, includes 12 Boeing-built F/A-18 fighter jets alongside eight Lockheed Martin F-35Cs. Each purchase would be worth roughly $1 billion for the companies—if Congress decides to fund them.

That’s great news for Boeing (BA), whose F/A-18 production line is set to cease production in 2017 if the company receives no new orders. But a decision on whether to spend the company’s own cash on long-lead production materials like titanium will have to be made this summer, before Congress finalizes its fiscal 2016 budget. A strong signal from the Navy and Congress now could play a big role in that decision.

Whether or not Congress will fund the Navy’s wish list remains entirely unclear. Such “wish lists” are often derided as unproductive opportunities for legislators to pick and choose programs and technologies that benefit their districts irrespective of Pentagon priorities. And with sequestration caps returning in 2016 (and the defense budget put forth by the White House already punching right through the Budget Control Act ceiling), funding for “wish list” items could be tight.

Then again, it may not be. Republicans in the Senate last week introduced a non-binding resolution to the budget adding an additional $38 billion to the overseas contingency operations (OCO) fund that the Senate Budget Committee had originally seeded with $58 billion. (OCO funds are those designated for ongoing military operations overseas and not subject to sequestration caps) That extra $38 billion in OCO funds dovetails conspicuously with the $561 billion base budget put forth by the Obama administration, which exceeded the defense budget’s $523 spending cap by—wait for it—$38 billion dollars.

Last night, House Republicans passed a similar budget, with $96 billion set aside in the Pentagon’s OCO fund. These budgets are not the final word on the fiscal 2016 budget, but they are the working blueprint. And though this so-called “sequester dodge” has drawn criticism even from some Republicans on Capitol Hill—Sen. John McCain called it a “gimmick”—they are a clear indicator of which way the wind is blowing. The defense hawks are beating the fiscal hawks in this round of negotiations, and the proposed “dodge”—along with a provision slipped into last week’s Senate budget that could allow for the altering of some sequestration—suggests the Pentagon could get more of what it wants.

Whether any additional cash would go specifically toward the Navy’s wish list remains uncertain. But the Navy’s vocal support for a batch of new F/A-18s coupled with the fact that the Pentagon may end up with some extra funds provides hope for the Super Hornet. And there’s good reason for the Pentagon to keep the F/A-18 production line going. Sustaining the F/A-18 would keep its cousin, the E/A-18 Growler, alive as well. The Growler, an electronic warfare variant of the Super Hornet built around the same airframe, does a very specific job that many think the F-35 isn’t necessarily well-suited to, primarily jamming enemy radars and communications to ensure safe passage for other attack aircraft.

Boeing needs to produce at least two aircraft per month to keep its St. Louis-based F/A-18 assembly line economically viable, so the additional dozen F/A-18s desired by the Navy would only sustain production for an additional six months. But it would keep it humming into mid-2018, when further U.S. orders or a foreign customer might extend production further still. Boeing is currently chasing a potential deal with Kuwait for a reported 28 aircraft. Other Gulf nations as well as Denmark and Belgium are weighing fighter jet orders at the end of the decade as well. An lifeline for the F/A-18 now could be the difference between Boeing remaining a maker of combat fighter jets or exiting the space entirely as orders for its existing products taper.

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