Boeing Has This Plan to Meet Growing Demand for Military Weapons
Global defense budgets are forecast to expand 9.3 percent to $1.65 trillion by 2021, according to analysts at IHS Janes. Meanwhile, defense contractors — especially Boeing (NYSE:BA) — are working to meet demand. In particular, budgets in the Asia Pacific region are expected to outstrip those in North America by 2021, increasing by as much as 35 percent from 2013 levels to $501 billion.
In South Korea, Boeing is pitching the latest model of its F-15 fighter, known as the Silent Eagle, against the Eurofighter consortium’s Typhoon and Lockheed Martin’s (NYSE:LMTF) F-35 stealth jet to secure a 8.3 trillion won ($7.4 billion) contract to supply the country with 60 fighter aircraft. A final decision is not expected until mid-September, sources told Reuters, but the price Boeing quoted was the only one of the three bids that fell below the ceiling set by the country’s arms procurement agency and that will likely put the company close to winning the contract.
As for the official announcement, a spokesman for the government’s Defense Acquisition Program Administration, DAPA, said at a Friday briefing that at least one bid came in on target and a comprehensive evaluation would soon begin. The $7.4 billion purchase represents South Korea’s largest defense import program ever – its aim is to replace the country’s aging fleet of F-4 and F-5 jets that are schedule to retire beginning in 2015. However, because last year’s presidential election and criticism that the government had rushed the project, the replacement process is behind schedule, and analysts say that it is unlikely the government will be able to have the first plan delivered as planned in 2017.