Home Stock Market Lockheed withdraws from Air Force tanker competition, boosting Boeing’s KC-46 chances.

Lockheed withdraws from Air Force tanker competition, boosting Boeing’s KC-46 chances.

Lockheed withdraws from Air Force tanker competition, boosting Boeing’s KC-46 chances.

Lockheed Martin Withdraws from Air Force Tanker Competition, Boosting Boeing’s Chances

Lockheed Martin’s Exit Gives Boeing’s KC-46 Pegasus a Boost

Lockheed Martin Corp has withdrawn from the U.S. Air Force’s competition to build at least 75 refueling tankers, giving Boeing’s KC-46 Pegasus a significant advantage in the highly anticipated defense contract. This move comes as a boost for Boeing, increasing its chances of winning the program despite the costly mistakes it has made with its existing fleet of KC-46 tankers.

Airbus Continues Pursuit of Contract Without Lockheed

Airbus had partnered with Lockheed as the prime contractor in 2018 to offer its A330 multi-role tanker transport. However, Airbus announced on Monday that it would continue to pursue the competition without Lockheed’s involvement. This decision opens up new opportunities for Boeing in the race to secure the multibillion-dollar defense contract.

Boeing’s Troubled KC-46 Fleet

The total order for the tanker contract could amount to approximately $12 billion, but it is likely to be higher. Despite this, Boeing’s KC-46 has faced numerous challenges, including defects in its on-board video system and a refueling boom that fails to connect the tanker to aircraft seeking refueling. These issues have resulted in significant losses of $7 billion for Boeing.

Boeing’s Stock Rises with Lockheed’s Withdrawal

Upon hearing the news of Lockheed’s exit, shares of Boeing turned positive, experiencing a 1.7% increase. This development signals a positive outlook for Boeing and its potential success in the competition.

A Chance for Airbus

An Airbus victory in the competition would mark its first aircraft contract with the U.S. Air Force after two decades of attempting to penetrate the U.S. defense market. However, this is not the first time Airbus has faced disappointment in the U.S., as it was previously dropped by Northrop Grumman Corp in 2008.

The U.S. Air Force’s Replacement Plan

The U.S. Air Force aims to replace its aging fleet of KC-135 tankers in three lots. The competition for the second tranche of as many as 160 jets, in addition to the 179 KC-46 Pegasus planes already being built by Boeing, began in 2022. However, the number was later reduced to 75. Lockheed plans to shift its tanker team and resources to support the U.S. Air Force’s Next-Generation Air-Refueling System (NGAS) initiative.

Surprise Departure of Lockheed’s Bid

The abrupt departure of Lockheed’s bid, known as LMXT, surprised many Capitol Hill aides. Advocacy for the LMXT had been extensive, with Lockheed investing heavily to ensure that Boeing’s plane was not the clear winner in the second tranche. Despite these efforts, Boeing secured the first phase of the procurement in 2011, winning a contract for 179 KC-46s.

The departure of Lockheed from the competition provides a significant advantage for Boeing’s KC-46 Pegasus. However, Airbus continues to pursue the contract, hoping to make a breakthrough in the U.S. defense market. The future of the tanker competition remains uncertain, but one thing is clear: the stakes are high for all parties involved.