Boeing looks to Congress to fund fighters after Navy skips orders
WASHINGTON (Reuters) - Boeing Co (BA.N) is mounting a last-ditch campaign to convince U.S. lawmakers to buy more fighter jets and stave off a shutdown of a St. Louis production line after the U.S. Navy failed to fund the jets.
The Navy's fiscal 2015 budget plan omits funding for any extra F/A-18E/F Super Hornets or EA-18G Growlers, according to several sources familiar with the issue. The White House is due to submit its 2015 budget request to Congress on March 4.
While the 2015 budget does not include funding for shutting down the F/A-18 production line in St. Louis after 2016, the Navy plans to add such termination funding to its 2016 budget, said one of the sources, who could not speak publicly.
That spells bad news for Boeing, which needs additional orders from the U.S. Navy to continue producing the fighter planes, according to industry executives and analysts.
Navy officials have said they would like to keep buying Super Hornets and Growlers, but cannot afford to do so given tough budget pressures that have already forced the service to propose eliminating one of 11 U.S. aircraft carriers.
That means Boeing must now appeal to U.S. lawmakers to fund an additional batch of Growlers to keep the line running for one more year while it continues to hunt for foreign sales.
The program has strong support among lawmakers but a dearth of funding for aircraft carriers and other priorities may complicate Boeing's efforts. Many traditional defense hawks have also died or left Congress, and many current lawmakers are more worried about deficits than maintaining defense spending.
Boeing officials declined comment, noting that the fiscal 2015 budget has not been released. But the company is already airing advertisements on a local Washington radio station and its lobbyists are working their connections on Capitol Hill.
Boeing contributed $1.3 million to individual lawmakers and political action committees in 2013 and spent $15.2 million on lobbying efforts, ranking as the 13th biggest spender, according to the Center for Responsive Politics.
Boeing's F/A-18 program manager Mike Gibbons has said the company needs to build about two planes a month to keep costs down, which would require extra funding of at least $$1.2 billion, but Boeing is studying possible savings by combining the F/A-18 and F-15 production line, which runs through 2018.
Industry experts note Lockheed Martin Corp (LMT.N) builds just one F-16 a month at its Texas plant and say Boeing may be able to maintain F/A-18 production at a lower rate.
Boeing remains in competition for orders from Canada and Denmark, and sees other prospects in the Middle East. But none of those foreign orders are likely to materialize in time to maintain the St. Louis F/A-18 line past the end of 2016.
Boeing and U.S. officials had hoped to land a big F/A-18 order from Brazil, but Brazil in December said it would buy the Gripen built by Sweden's Saab (SAABb.ST) after documents leaked by former National Security Agency contractor Edward Snowden revealed U.S. spying on Brazilian President Dilma Rousseff.
Brett Lambert, a former top Pentagon official, said lawmakers still viewed F/A-18 purchases as a hedge against possible delays in the F-35 fighter jet program, although he said the program was more stable than just a few years ago.
Proponents of additional F/A-18 purchases argue that the F-35 has not completed development, and that continued issues with its software development could delay the ability of the Marine Corps to start using the plane in combat from mid-2015.
(Reporting by Andrea Shalal-Esa; Editing by Lisa Shumaker)