Boeing may slow F/A-18 plane output to keep line going longer

By Andrea Shalal

WASHINGTON (Reuters) - Boeing Co is considering a slower build rate and other options to keep production of its EA-18G electronic attack planes running into 2017, and give Congress time to add more orders, a top company executive told Reuters in an interview.

The St. Louis production line for Boeing's F/A-18E/F Super Hornets and EA-18G Growlers is slated to shut down after 2016 unless the Pentagon's No. 2 supplier wins additional U.S. or foreign orders for the planes soon. The plant will build F-15 fighters through at least 2018, based on current orders.

U.S. Navy officials often laud the performance, on-time deliveries, and low operating cost of the Super Hornet and Growler aircraft, which fly from U.S. aircraft carriers.

But U.S. defence officials say the Pentagon's 2015 budget will not fund any more of the Boeing planes given competing budget demands and a growing focus on Lockheed Martin Corp's next-generation F-35 fighter, which has three models, including a carrier-based model for the Navy.

Boeing executives acknowledge the tough budget environment, but say detailed studies under way by the U.S. military reveal a need for more electronic attack aircraft given work by potential adversaries on new radar systems that could detect F-22 fighters and other stealthy planes like the F-35.

The EA-18G Growlers fly into battle with other warplanes, jamming, confusing and disrupting enemy radars. Other aircraft have some electronic capabilities, but Boeing says the Growler is the only plane that addresses the full spectrum of threats.

"Boeing is looking for creative ways to partner with the Navy, including lowering the rate to two aircraft per month, to keep the line running past 2016," Mike Gibbons, vice president of F/A-18 and EA-18 programs, said in a telephone interview late on Friday. Restarting the line later would be costly.

The company already plans to slow production to three jets a month from four, but scaling it back further to two jets could extend the production line through mid-2017, without substantially raising the price, he said.

"We want to keep the opportunity open so that Congress can act," he said. "It's pretty clear that there's an emerging realization of the need for more Growlers ... not just for the Navy, but the Air Force and the Marines."

He said the Navy and the Pentagon's Cost Assessment and Program Evaluation office were "very seriously" studying the need for more electronic attack capability, and Boeing could eventually land 50 to 100 more Growler orders.

Even though a possible shutdown is still years away, Boeing must decide within a month whether to use its own funds to keep certain suppliers producing titanium and other items that take longer to produce, or to start shutting down the line.

Congress added $75 million in "long lead funding" for 22 more Growlers to the Pentagon's fiscal 2014 defence budget, but the Navy has not yet released those funds.

Gibbons said the Navy had shown a "very strong willingness" to accept slower delivery of jets if that kept the line running beyond 2016, but no decisions had been made. If agreed, the slower build rate could be factored into a multibillion dollar contract for 47 jets that Gibbons said he expected to finish negotiating with the Navy over the next month or two.

Some U.S. lawmakers worry about ending the Boeing production line in 2016, three years before the Navy is due to start using its F-35 jets in combat, especially given continued issues with the development of software that the F-35 fighter needs to be able to operate certain key weapons.

Representative Randy Forbes, a member of the House Armed Services Committee, told Reuters he is pressing the Navy to explain its reasoning for shutting the line. "I'm really concerned," he said. "If we need them later, you can't rebuild all that production capacity."

Pentagon officials argue that the $392 billion F-35 program is making progress after years of delays and cost overruns. They say the new jet's electronic warfare and data fusion technology will be vital to fight future potential adversaries.

Deputy Chief of Naval Operations Vice Admiral Joseph Mulloy last week said the Navy remained committed to the F-35 program, and had no plans to extend the Super Hornet/Growler line.

But others say the Navy remains sceptical about the carrier variant of the F-35, which is due to start sea trials this summer. The Navy plans to defer orders for four F-35s in fiscal 2015, and a total of 33 jets over the five-year planning period that runs through fiscal 2019, said one source familiar with the plans.

Congressional aides say lawmakers may be hard-pressed to fund extra Growlers given competing demands at a time when the Pentagon is targeting military pay and other systems.

Gibbons said budget pressures strengthened Boeing's push for more Growlers since the jet offered what he called an "incredibly affordable and agile weapons system for the future."

The company says it also sees possible orders from two buyers in the Middle East, which plan to decide by the end of 2014, as well as Canada, Denmark and Malaysia.

Canada helped fund the development of the F-35 and had planned to buy the plane, but is now considering a fresh competition given problems with the initial F-35 selection. Denmark is launching a competition this year.

Richard Aboulafia, analyst with the Virginia-based Teal Group, said moves to slow production of the jets could help extend the line for a while, but he was sceptical about the likelihood of more foreign orders.

"They've been on the international campaign trail for 20 years and there's been exactly one customer -- Australia. There just isn't a lot of demand for heavier twin-engine fighters."

(Reporting by Andrea Shalal; Editing by Rosalind Russell)