WASHINGTON – The Boeing Co. has won a $3.9 billion contract to develop a new U.S. Navy patrol plane based on its 737 passenger jet, the Pentagon said Monday.
The contract to develop and demonstrate the new plane could lead to Boeing building 109 of the aircraft, said John Lockard, senior vice president and general manager of Boeing Naval Systems.
“Obviously, this is a terrific day for us and our customer the U.S. Navy,” he said.
The planes will be assembled in Renton. The work will sustain about 1,200 Boeing jobs around Puget Sound, and could lead to some callbacks of laid-off workers, a Boeing spokeswoman said.
The contract gives Boeing until 2012 to develop and test the design, said the spokeswoman, Madonna Walsh, with Boeing’s defense division in St. Louis. The first planes should be ready for testing in 2009, she said.
The planes are intended to replace the Navy’s P-3C and EP-3E patrol and surveillance planes. The Navy has thee squadrons of P-3s based at Whidbey Island Naval Air Station.
“I look forward to the new planes replacing the aging P-3s at Whidbey,” said U.S. Rep. Rick Larsen, a Democrat whose district includes the air base.
Boeing was in fierce competition with Lockheed Martin for the contract for the multimission marine planes, which will be used to hunt submarines, maritime patrols and other functions. Lockheed Martin had based its proposal on an extensive upgrade of its propeller-driven P-3, long the Navy’s primary patrol plane.
Under the contract, Boeing and its subcontractors – engine-maker CFM International, Northrop Grumman Corp., Raytheon Co. and Smiths Aerospace – will produce seven test aircraft. Plans eventually call for the Navy to replace its aging fleet of 223 P-3 Orion aircraft with 109 of the new planes.
Aerospace analyst Paul Nisbet of JSA Research called it Boeing’s biggest contract victory this year, even though the planes will contribute only a small percentage to company revenues and estimates of Boeing’s earnings are unlikely to be altered. The contract should boost production of the 737 line by about 5 percent, he estimated.
“It’s a great win, and it’ll go for many years, as long as those planes are alive, and that’s probably 40 years from now,” Nisbet said.
The Navy’s decision comes as Boeing is waiting to hear whether it will be able to move forward with its deal to supply 100 airborne tankers to the U.S. Air Force, based on a conversion of its 767 passenger jet, built in Everett.
Taken together, the contracts could mean billions of dollars for Boeing, at a time when its commercial airplane division badly needs the business.
“I’m so proud that the Navy has decided that Boeing is the company to build this new plane, which is so vital to our long-term safety and security,” said Sen. Patty Murray, D-Wash.
Rep. Norm Dicks, D-Wash., said Boeing’s entry showed greater range and speed than the Lockheed Martin model.
Boeing shares rose 8 cents to close at $48.83 on the New York Stock Exchange before the contract news. They gained 90 cents, nearly 2 percent, in the extended session.
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