OTTAWA (Reuters) - Boeing Co (BA.N) is still very much engaged with South Korea over the possible sale of F-15 fighter jets, despite Seoul’s move last month to restart a multibillion-dollar tender process, a senior Boeing executive told Reuters on Thursday.
The company also said the partial U.S. government shutdown would have had more significant ramifications if it had lasted longer, but saw no long-term effect from the 16-day hiatus in operations that ended overnight.
“We were able to contain it pretty well over the last two weeks,” said Dennis Muilenburg, who heads Boeing’s defense unit.
The F-15 had been poised to win the South Korean tender, but Seoul pulled the plug after former military top brass and ruling party lawmakers criticized the plane for lacking stealth capabilities.
“What they decided to do was to delay and take another look, so we’re still very much engaged there with the F-15. That competition has been delayed and restructured but it’s not over,” Muilenburg said.
Nonetheless, Lockheed Martin’s (LMT.N) F-35A, previously considered too expensive, is now seen in South Korea as a likely candidate after the defense ministry singled out a fifth-generation fighter as the preferred option.
Canada also is trying to decide whether to go for Lockheed’s F-35 or one of four competitors, including Boeing’s F-18 Super Hornet.
In contrast to South Korea, Canada had at first expressed a preference for the Lockheed Martin plane because of its advanced capabilities.
But after a furor over its cost and the fact that the government had not tendered for it, Canada has reached out to Boeing and other foreign aircraft manufacturers.
In a speech to an aerospace and defense conference in Ottawa, Muilenburg took issue with characterizing the F-35 as a next-generation plane, saying Boeing is constantly adding new technology, “not just every generation.”
He also said governments should demand certainty in cost and scheduling, noting that 600 F-18s had been delivered around the world, each on cost and on time or ahead of schedule. He said a Super Hornet would cost half as much per flight hour as an F-35.
Lockheed Martin officials were not immediately available to comment.
South Korea’s decision to reopen bidding for the fighter-jet contract signals a wider problem for Boeing - that revenue from the F-15, its most profitable but aging military aircraft, is winding down.
But Muilenburg told Reuters the F-15 line remained very strong.
“We have 84 new builds that we’re building for Saudi Arabia, so that line is full through 2018, 2019, time frame. We have F-15 users around the world. We’re continuing to upgrade, modify the jets for the U.S. Air Force as well,” he said, “so that line has a lot of life and a lot of opportunity ahead of it yet.”
Additional reporting by David Ljunggren; Editing by Jeffrey Hodgson and Dan Grebler