Aircraft

More international sales sought to compensate for slowdown in US defence spending

Boeing Integrated Defence Systems (IDS) is banking on an increase in revenues from international sales, driven in part by a wave of new fighter orders in Asia, to offset an expected slowdown in US government spending. IDS president and chief executive Jim Albaugh says the manufacturer can no longer rely on the US Department of Defense, which has driven double-digit growth at IDS over the last five years.

International sales, which account for 7% of IDS’s revenues, or about $2.2 billion annually, will instead fuel expansion over the next several years. “We see a real slowdown in Department of Defense spending and a lot of opportunities internationally,” Albaugh says.

Specifically, Albaugh sees opportunities in India, Japan and South Korea. Boeing is negotiating a contract for “up to 20” F-15s with Singapore, while India is considering the F/A-18 in a competition for over 120 new fighters. Information on both the F-15 and F/A-18 is being supplied to Japan, which is in the early stages of a competition that is expected to result in an acquisition from about 2009.

South Korea, which has just taken delivery of the first two of 40 F-15Ks on order, also plans to acquire another batch of new fighters late this decade. Further fighter orders could be generated in the event of a slip in the Lockheed Martin F-35 Joint Strike Fighter (JSF) programme. Albaugh declines to say if IDS’s forecast for higher international revenues is based on delays to the JSF, but says: “It’s a good chance that programme may be late. It’s a good chance that programme may be over budget. We’re working to make sure the F-15 and F/A-18 are as capable and as survivable and as affordable as they can be. If there’s a gap … we’ll be there with capable aircraft.”

Until Singapore selected the F-15T over the Dassault Rafale last month, the long-running F-15 production line had faced possible closure in 2008.

Albaugh says the CH-47 Chinook helicopter is enjoying a surge of interest, especially in Asia-Pacific, following a spate of natural disasters. Over the longer term, he expects exports of the new P-8A maritime patrol aircraft.

Albaugh visited India, which is attracting new attention from US defence contractors, before attending the 2005 Seoul air show last week. Expected to generate $31.5 billion in revenues this year, IDS accounts for over 50% of Boeing’s revenues and is the world’s second-largest defence contractor.

BRENDAN SOBIE/SEOUL