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WASHINGTON (Reuters) - Boeing Co (BA.N) has been awarded a contract valued at $2.1 billion to build 16 P-8A Poseidon long-range maritime spy planes for the U.S. Navy, the Pentagon announced on Tuesday.
The deal marks the first full-rate production contract for Boeing for the new planes, and follows a decision by Australia last week to buy eight P-8A planes for A$4 billion ($3.6 billion).
The aircraft, based on Boeing's 737-800 commercial airplane,
will replace the U.S. Navy's P-3 spy planes, which have been in service for more than 40 years.
The Navy uses the new P-8A planes for anti-submarine, anti-surface warfare and surveillance work. Overall, the Navy plans to purchase 117 P-8As to replace its P-3 fleet.
The new order, to be completed by April 2017, will bring the number of aircraft ordered to 53.
Boeing has delivered 13 P-8As to the Navy, which deployed its first patrol squadron to Kadena, Japan in December 2013 and has been conducting missions since then.
Boeing assembles the P-8A aircraft in the same facility where it builds all its 737 aircraft, modifying the aircraft while they are still in production, instead of taking a completed airliner and tearing it apart to make the military modifications.
Boeing officials say that strategy has helped them reduce the cost of the aircraft and keep the program on or ahead of schedule.
Reporting by Andrea Shalal; Editing by Andre Grenon and Jonathan Oatis