Chris Chadwick, president of Boeing
Military Aircraft, believes that countries will continue to focus on the options for force modernisation despite the downturn
Tell us about the Boeing F-15 Silent Eagle and what it brings to air forces?
It targets existing customers who want to know how much stealth is enough and wonder about the cost for the next generation of fighters. The modifications like active electronically scanned array radars, new displays, and state-of-the art air capability provide the most modern technology available.
It changes the game to an extent and provides an aircraft that continues to do what it did in the past, adds new capabilities and is more survivable. Customers can reconfigure and put as much of the weapons externally as they need. Sometimes, all they just need is a real good fighter and this provides that.
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Given that the Silent Eagle could cost around $100 million, close to the F-35's estimated $120 million, is it too expensive? Can you get an order in time to prevent the production line ending in 2012?
It is the quantity ordered that drives the price. Customers get economies of scale if they buy more. A country's infrastructure will also be part of the F-15 to an extent that the F-35 is unable to do so. South Korea, for example, may want to bring certain elements of the aircraft, say the structure or missions systems, to their industry and we can do that.
And because these customers already have F-15s, the logistics tail cost is a lot less because you are not introducing a new fighter. We're hopeful of something coming through in 2009 but, if we don't get a letter of intent this year, we'll have to use company funds to maintain the production line.
We've done that in the past and we'll do it if we see a good opportunity.
What are the chances that the US Navy place a third multi-year order for the F/A-18E/F from 2011? What are the aircraft's international prospects?
Domestically, there is a significant force structure shortfall and the Super Hornet provides the best value to the USN in terms of cost and capability. We've kept bringing the cost down - the unit price was $54 million last year - while increasing the capability. There's tremendous congressional support for the multi-year, which is significantly better as it saves money.
Internationally, we are in a good position in India, Denmark and Brazil. Beyond the near term, Greece is looking at what they want to do. We've had initial discussions with Qatar. We are willing to engage any existing Hornet customers on whether they would like to make the transition to the Super Hornet.
The C-17 line was a casualty of the budget. What is Boeing's reaction?
We'd love to have a strong domestic base for the C-17 and we have to see how the budget decision plays out in Congress. Keeping the line open always comes down to the business case, and we're using company funds to protect the supply chain now as we still see opportunities. Globally, Qatar and UAE are potential customers and India says it needs mobility.
With the Airbus A400M's difficulties, we will wait to see what happens. We are not actively marketing the C-17 to A400M customers, but we are talking to folks in the UK and the Middle East countries, existing customers and new ones.
How are you preparing for the new KC-X tanker competition?
We can't say much as the RFP is not out and we don't know what the requirements will be. So we won't know if we will offer a platform based on the 777 or 767. The original competition started out wanting a small tanker and ended up wanting a large tanker. We'll wait and see what happens.
Boeing's rotorcraft business is doing well. Why is that?
Domestically, we've had five-year multi-year orders from the Pentagon for the [CH-47] Chinook and V-22 [Osprey] and this solidifies the production line. The Apache Block 3 development plan is also going well. The Chinook attracts interest worldwide for military and humanitarian roles, and we expect the Apache to do well in India's attack helicopter competition.
The V-22 has revolutionized war fighting with its speed and range and we are trying to reduce its unit cost, just like the Chinook and F/A-18, while keeping the capability and evolving the performance.
The unmanned business is going to be even bigger, but there remains a perception that Boeing still has some way to go in this segment.
There is a tremendous need for unmanned capabilities and pockets where no one else is present. The market is potentially worth $100 billion, and we are keen to get in through a combination of organic growth and mergers and acquisitions. We bought Insitu nine months ago, giving us a very mature product with the ScanEagle. There are others like the A160 helicopter, and we are looking at the high-altitude long-endurance UAV market. We want to build prototypes and get it out there to the customers, who mainly want airlift, ISR and strike capabilities, to use and experiment.
Boeing has been worst affected by the US defence budget. What is IDS doing to protect the defence business?
We look at it from a couple of perspectives. Defence secretary Gates' announcement was a budget recommendation and this still has to play out in Congress.
We remain confident about the support for our programmes. Our products have tremendous opportunity in the international region and lend themselves to upgrades. In this time, amid an economic crisis, they provide a value proposition that you are just not going to get from our competitors.
This is a challenging time, but with change comes opportunity. There include opportunities in the cyberworld, the maritime domain, energy. We look at the core areas that we have, and there are many opportunities to leverage commercial aircraft into the military market. We can evolve our portfolio and make it strong. The portfolio may be difficult in the future, but IDS is very strong company.
What are you looking for at the Paris air show?
A: We'll be focusing on unmanned, the capabilities that we talked about, our mainstays. The mood should be good despite the crisis. At the end of the day, the customer nations are pretty important and tend not to be as affected by economic downturn. Military products are attuned with international markets and we will have many good dialogues.