May 7, 2015 / 9:54 PM / 3 years ago

Despite Kuwait deal, Boeing's F/A-18 jet faces uphill global climb

WASHINGTON, May 7 (Reuters) - Boeing Co will struggle to boost international sales of its F/A-18E/F Super Hornet fighter jets despite a $3-billion-plus deal expected soon with Kuwait, analysts and industry executives said.

On Wednesday, Reuters reported that Kuwait is poised to announce in coming weeks an order for 28 Super Hornets. On Thursday, people familiar with the Kuwait deal said it also includes options for up to 12 additional jets.

The Kuwait order will help extend production at Boeing’s St. Louis facility into 2019, and preserve its ability to compete for fighter orders from Canada, Denmark, Malaysia and Belgium.

But the Kuwait order was only the second foreign order for the jets after years of talks, and it is far from a “major breakthrough” for Super Hornets on the global fighter market, said Richard Aboulafia, analyst with the Virginia-based Teal Group.

Canada and Denmark remained “outside possibilities” for further F/A-18 orders, he said, citing both countries’ investment in the F-35 Joint Strike Fighter being developed by Lockheed Martin Corp for the U.S. military and eight partner countries.

Byron Callan with Capital Alpha Securities agreed that sales to Canada and Denmark were “long shots” for Boeing.

He said the Kuwait deal was unlikely to trigger further F/A-18 sales in the Middle East given that most other countries are already ordering jets from other companies. He also cited the region’s continued longer-term interest in the F-35.

“There aren’t any other doors to open,” Callan said.

Boeing still has a chance of selling some of its F-15 fighter jets to Qatar, analysts and industry executives said, but such an order was seen unlikely for several years, after news last week that Qatar had ordered 24 Rafale fighter jets from France’s Dassault for 6.3 billion euro ($7.02 billion).

The expected Middle East order, combined with U.S. congressional moves to fund 12 more Boeing F/A-18E/Fs in the fiscal 2016 budget, provides a lifeline for a program that was once due to end production this year.

Maintaining production of the popular fighter jets, equipped to land on and take off from aircraft carrier, will give the U.S. military the option of ordering more EA-18G electronic attack jets, which are built on the same line.

The Navy has said it has enough EA-18Gs, or Growlers, but a study of the needs of other military services, could point to the need for an unspecified number of the jets.

Gulf allies remain strongly interested in the F-35 fighter jet, but Washington is likely to continuing to block sales for several years given a congressional mandate to ensure Israel’s “qualitative military edge,” according to U.S. officials. Israel is slated to start receiving its first F-35 warplanes next year. (Reporting by Andrea Shalal; Editing by David Gregorio)

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