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Boeing (BA) and the Air Force have somehow reduced by more than half the expected acquisition cost of coach TX, suggesting that the aerospace giant will see its profit margins drastically reduced – and that he has a technological trick.
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The Air Force said the contract was worth $ 9.2 billion to replace the aging T-38 trainers manufactured by Northrop Grumman (NOC). That's more than $ 10 billion less than the $ 19.7 billion cost estimate for the Air Force for 351 aircraft.
Lockheed Martin (LMT), which offered a variant to a trainer already in production while Boeing offered a streamlined design, was considered the leader of the T-X risk-free trainer competition. Analysts were waiting for Boeing to be competitive in its prices.
"It's a bit difficult to know how tight margins are," said Jeff Windau, Senior Equity Analyst at Edward Jones. "This is the potential risk: that things are very close to the margin side."
Will Roper, director of the acquisition of the Air Force, for his part credited the intense competition for the T-X trainer contract for the sharp drop in costs.
But Roper also said the cost of the Air Force, which ranged from 16 to over $ 19 billion, was based on reviewing previous programs with "analogies" with the T-X trainer. The defense industry, however, is more forward looking and is looking at how new technologies will improve costs.
"While the industry proves that technology has really matured and changed the game, then we are able to lower and recover that savings margin," he told reporters Thursday night.
Boeing stated that it can not comment on competitive documents before the end of the claim period.
Shares climbed 1.2 percent to 371.90 percent on the stock market today, still in the range of purchase. Lockheed dropped 9 cents to 345.96. Northrop gained 0.2% to 317.40.
Fixed price contract for T-X trainer
The Air Force is currently considering purchasing 351 T-X training aircraft, 46 simulators and ground equipment, but said the contract allows the service to purchase up to 475 aircraft and 120 simulators.
Boeing has strong reasons to stay on the costs. The Pentagon said the acquisition program was starting as a fixed price contract with potential incentive fees for the first four production batches, and then would become a firm price contract for the fifth batch.
This means that Boeing will be ready for any cost overruns. Boeing is no stranger to cost overruns on fixed price contracts. He accumulated $ 3 billion in air force KC-46 air tanker charges due to persistent technical problems and delays in delivery.
Edward Windau still thinks that the T-X coach was a "very nice win" for Boeing and he thinks the aerospace giant has "pretty much" the way for the trainer to be delivered on time.
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