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Wed, Apr 08, 2009

Boeing Blitzed By Pentagon Budget Recommendations

Stands To Lose Billions In Defense Work

If it's bad news for Boeing, it's bad news for Seattle... and the Seattle Times has broken down the potential impact on the region of the defense realignment announced Monday by US Secretary of Defense Robert Gates.

As ANN reported, Gates proposed a Pentagon budget that, if approved in its current form by Congress, would cap production of the F-22A Raptor fighter at 187 units, and end further work on the VH-71 presidential helicopter and the US Air Force combat search and rescue helicopter (CSAR-X) contract.

Despite what would appear initially to be sizable losses for, not Boeing, but Lockheed Martin -- which builds the Raptor, and is primary contractor on the VH-71 -- analyst Loren Thompson of the Lexington Institute observes, "Boeing seems to have been hit harder than any of the other major contractors."

Boeing makes the wings for the Raptor, which now appears likely to end production in 2011. That accounts for about 1,200 Boeing workers. The company has also been a bidder to develop the CSAR-X helicopter, as well as the TSAT satellite constellation. Those potential cancellations are worth tens-of-billions of dollars.

In one bright note, Gates did commit to a third round of bidding for a new Air Force aerial tanker this year. Boeing is expected to bid its KC-767 yet again, against the EADS/Northrop Grumman KC-30A, which won the last round of bidding.

FMI: www.boeing.com/ids

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