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US Air Force awards Boeing a $23bn F-15EX mega-deal

The US Air Force gave Boeing a mega-deal worth up to $23 billion
Jordan
Major
Updated: 05 Dec, 2020
4 mins read

Reports emerged on July 13 that the Air Force has awarded Boeing (NYSE: BA) a $1.2 billion contract to deliver the first lot of F-15EX fighter jets.

This new mega-deal between the aircraft manufacturer and the Pentagon could be worth about $23 billion, according to Boeing. The deal includes an indefinite-quantity and indefinite-delivery contract.

The first lot features eight planes that are already under construction at the manufacturer’s St. Louis production facility.

Delivery for the first two planes is scheduled for the Q2 of the fiscal year 2021. The rest are expected to be completed and delivered in 2023 based on official reports provided by the Air Force.

Plans are underway to acquire 76 F-15Exs in the future years’ defense program and up to 144 over the life of the entire program.

Will replace the old F-15C/Ds

This new variant of the jet will replace the old F-15C/Ds offering top quality capabilities over legacy systems. This capability has made some observers call the aircraft a “4-5-gen” model. It means that the plane is more advanced compared to the fourth-generation platforms in the current fleet.

But, it is not in the same class as stealth fighters like the F-22 Raptor or the F-35 joint strike fighter. The Air Force praised the open mission systems infrastructure that will support the rapid insertion of new technologies to ensure that the planes remain viable for decades to come.

The open mission systems are the most considerable differentiators between the new version and legacy variants in older jets. Will Roper, the Assistant Secretary of the Air Force for Acquisition, Technology, and Logistics said:

“The F-15EX’s digital backbone, open mission systems, and generous payload capacity fit well with our vision for future net-enabled warfare. Continually upgrading systems, and how they share data across the Joint Force, is critical for defeating advanced threats. F-15EX is designed to evolve from day one.”

Notably, the program is designed to act as a pathfinder for the Pentagon’s DevSecOps initiative. The initiative is aimed at creating more secure and agile software as explained by Boeing. Boeing vice president and F-15 program manager, Prat Kumar, commented:

“F-15EX brings together benefits of digital engineering, open mission systems, and agile software development to keep it affordable and upgradable for decades to come. This means we can rapidly test and field new capabilities on F-15EX keeping our war-fighters ahead of threats.”

Advanced cockpit systems, a new electronic warfare system, and fly-by-wire flight controls are the other features expected to come with the two-seater fighter jet.

Weapons

Boeing praised its massive weapons payload capacity claiming that the jet can launch 22 feet long hypersonic weapons weighing up to 7,000 pounds. Currently, the hypersonics is a top research-and-development priority for the Pentagon.

These weapons are designed to travel at speeds exceeding Mach 5. Also, they are expected to be quite maneuverable and capable of overwhelming and defeating enemy air-and-missile defense systems.

Nevertheless, some analysts in the national security community criticized the Air Force’s decision to acquire the F-15EX. They suggest that the service should go for more Lockheed Martin-built F-35s instead. The Lockheed Martin-built F-35s can be more survivable against advanced rivals like China and Russia according to the critics.

Boeing and Air Force say that the F-15EX is a compliment and not a substitute to the joint strike fighter. The service says that the initiative is a cost-effective strategy of replacing old planes and enhancing its inventory.

Defense officials are still worried about the sustainment costs of the F-35A fifth-gen fighter. Nonetheless, the per-unit procurement cost of the jet has lessened considerably in recent years making it a major competitor to the fourth-generation aircraft.

Based on its design, the F-15EX will need minimal transitional training and infrastructure changes for the units that are currently operating legacy F-15s. Thus, it guarantees the continuation of mission as explained by the Air Force. Air Combat Command commander, Gen. Mike Holmes, said:

“The F-15EX is the most affordable and immediate way to refresh the capacity; and update the capabilities provided by our aging F-15C/D fleets. When delivered, we expect bases currently operating the F-15 to transition to the new EX platform in a matter of months versus years.”

These developments and deals are what Boeing Inc needs to keep the stock value stable and even looking upwards. Yesterday the trading session ended at 175.65 USD per stock.

Boeing (BA) stock price on a daily chart, as of July 14, 2020. Finviz.com data.

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Jordan Major
Author

Jordan is an investor and market analyst. He's passionate about stocks, ETFs, blockchain, and digital assets. At Finbold.com, he delves into the technicalities to obtain future trends for new market traders and gives insights into user-friendly platforms for beginners.

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