Thursday, 6 March 2014

Does Boeing have a "Plan B" for Canada?

What could Boeing offer Canada instead of the Super Hornet?
It was no real surprise Tuesday that the Pentagon's budget request for fiscal year 2015 didn't include any funding for building more F/A-18E/F Super Hornets or EA-18G Growlers.  Boeing's St. Louis assembly plant has enough USN and Australian Super Hornet orders to keep going until 2016...  And that's it.

Boeing has a few prospects for continuing the line, but the outlook is less than rosy.  Losing Brazil to the Saab Gripen was a definite blow, as Brazil's order for 36 aircraft would have likely been just a start, with the Super Hornet possibly finding a new home on Brazil's S ãu Paulo aircraft carrier.  Denmark and Canada are still possibilities, but both are "resets" of F-35 purchases.  There is no guarantee that a fighter competition will even be declared, and even then, no guarantee the Super Hornet would win.  Denmark in particular looks like it would favor the Saab Gripen, no surprise given that it was a Draken customer.

There are a few other interested nations, like Malaysia and the Middle East, but those orders would be years away for a relatively small number of aircraft...  If the Super Hornet was even picked.

It could be that the Super Hornet's "last, best hope" is Canada, but that looks tenuous now.  While some seem to believe it is Canada's default alternative to the F-35, and that it should be "single sourced" as an interim fighter.  This ignores the other fine choices available, but whatever.

It's kind of a moot point now anyway, with Canada forgoing any new military acquisitions until 2017 (one year after Super Hornet production is likely to end).  So that raises the question:

What will Boeing do if Canada declares an open fighter competition, but it's too late to offer the Super Hornet?

OPTION 1:  Bring it back.
Boeing's "Advanced Super Hornet".
Sorry for stating the obvious, but Boeing could always simply just restart production.  It could also slow down its current production in order keep the line open long enough to secure a few more orders.  Boeing is said to be contemplating this.  This would have consequences, however.  Slower production would likely either increase unit costs or decrease Boeing's profits.

Boeing would likely bolster the Super Hornet's chances by offering up its proposed "Advanced Super Hornet" upgrades, consisting of conformal fuel tanks (CFTs), enclosed weapon pods, and other upgrades.  While these upgrades certainly help modernize the Super Hornet, they are currently funded by Boeing.  If a buyer wants them, they will likely have to pay a premium for them.

Slowing production while adding expensive upgrades doesn't help the Super Hornet's value proposition.  It would be difficult to sell a Super Hornet that costs nearly as much as an F-35.

OPTION 2:  The Eagle.
The F-15SE Silent Eagle
Much like the Super Hornet in Brazil, Boeing's F-15SE "Silent Eagle" was dealt a harsh blow when South Korea decided to pass on 60 F-15SEs in favor of 40 F-35 Lightning IIs.  South Korea seemed like a great fit for the Silent Eagle, they already have a fleet of F-15K "Slam Eagles", so integration into the force would have been a snap.  With no other current potential suitors, the Silent Eagle's future looks dim.

Then again, the F-15SE seems like it could easily take the place of the Super Hornet in Boeing's offer to Canada.  F-15 production will continue until at least 2018, and if Canada hasn't selected a new fighter by then, it might as well not bother.

There certainly would be a case for the F-15 of any variant.  While it's "king of the sky" reputation has been surpassed by the new F-22 and upgraded Flanker variants, no one can really argue with its perfect combat record of 101 victories with 0 defeats.  Arguments about it being obsolete are put to bed by the fact that the USA is bolstering forces near the Ukraine with F-15Cs.  If the USAF has confidence enough in the F-15C to counter Russian forces, than that should be enough to convince anyone.

The F-15 is a reliable workhorse, as well.  Newer F-15E models could last as long as 32,000 flight hours, and even older F-15Cs could see up to 18,000.  There is a very good chance that F-15Es built today could outlast F-35s (rated for 8,000h) that haven't even been built yet.

All this begs the question:  Why hasn't Boeing offered up the F-15SE to Canada already?  First of all, the Super Hornet would likely be an easier sell, as Canada already flies the older "legacy" F/A-18 Hornet.  Switching over to the Eagle would require additional training and infrastructure changes, adding to the overall acquisition cost.  There is also the fact that the F-15 is an expensive aircraft to operate.  While a USAF F-16 costs just over $22,000/hr to operate, the F-15C runs almost double that, at almost $42,000/hr.  Even the F-35 is estimated to come in around the mid-$30,000 range.  After 8,000 flight hours, the F-15 would cost $80 million more, almost enough to buy another jet fighter to fly alongside the F-35.

It would seem doubtful that Canada would forgo the F-35 in favor of the older F-15 that would likely cost far more in the long run.

OPTION 3:  Partner up.

No hard feelings about Brazil?
One of the inalienable truths about business is that grudges are quickly forgotten if there is an opportunity for both parties to succeed by working together.  Despite competing against each other in several fighter competitions, Boeing and Saab have agreed to team up to submit a bid for the USAF's upcoming T-X jet trainer.  There seems to be some speculation on whether this T-X contender will be based on the Gripen or an all new design, but one can certainly see the potential here.

Unlike the Super Hornet, the USAF has requested funding for the T-X program.  $600 million in the next 5 years.

When Saab backed out of consideration for Canada's "reset" last year, it did so stating that it had doubts about whether it would be a fair competition.  What raises suspicion is that Saab's partnership with Boeing was likely being negotiated at that time, so there is a chance that Saab's backing out may have been a concession to Boeing.  But perhaps there's more to the story?

With the Super Hornet out of production and the Silent Eagle's future a big long-shot, Boeing may try to stay in the running by joining up with Saab to offer the Gripen.  Gripen production is guaranteed well into the 2020s, and its cost-effectiveness gives it a clear advantage over the F-35, the Typhoon, an the Rafale.  The Gripen's low cost could even make it a tempting secondary or interim fighter for those countries determined to procure the F-35, but in lower numbers.  South Korea is still looking for 20 fighters to go with its new F-35s, remember.

With Boeing's clout, Saab's ability to sell the Gripen skyrockets.  With the Saab Gripen, Boeing gets to stay in the fighter business at least until the T-X program, probably longer.  Most importantly, it hitches itself to the only fighter that seems to be enjoying significant sales outside of the F-35 program.  While Typhoon and Rafale sales seem to be at a near standstill, the Gripen seems to be picking up steam.  The trend is very clear, governments are either choosing the high-end JSF or the affordable Gripen.  It only makes sense for Boeing to get in on the action.

Boeing's T-X concept, predating its partnership with Saab.
Hopefully, Boeing will find a way to keep Super Hornet production going, at least long enough for Canada to make a decision.    The Rhino is a damn fine fighter, not as glamorous as the F-14 or F-22, but its proven to be a steady workhorse.  The outlook seems rather grim however.  Hopefully, Boeing will still be in the jet fighter business long after the Super Hornet is gone.


  1. Doug,

    I really like your interpretation of the SAAB/Boeing relationship, it sounds very plausible. If they teamed up on a solution for Canada it would be very competitive to any others. For the politically minded I can even imagine the conservatives begging SAAB/Boeing to collaborate so they could get out of this political mess. It's perfect, a modern jet, the best acquisition and operation costs and it upholds our interests with the American manufacturers. We could put off stealth until it has been proven to be cost effective.

    Here are a few more points that may support this union:

    1. Is SAAB going to use the Superhornets engines for the Gripen NG? Boeing can assist with the development and resources.

    2. I thought I read where SAAB will have some productions issues with the new orders they have. With the potential for future orders could Boeing pick up some of the excess?

    3. It is rumored that SAAB is working on a carrier and stealth variant. Could SAAB use Boeing expertise in this area?

  2. Couple of observations regarding your thoughts on Super Hornet:

    1st, Boeing can't slow the production rate and stretch it out unless USN gives them permission to. That's not likely, because it would raise costs and the delivery dates of those birds are built into navy planning and if they're moved to the right that affects Navy operations and raises costs elsewhere as older aircraft have to be kept on line.

    2nd, it's not safe to assume that Super Hornet is an automatic candidate for carrier sales. it was designed around US Navy supercarriers, and is approach and trap speed at normal weights may be difficult for smaller carriers to handle. Similalrly, it expects the USN's powerful catapults and the CVN's ability to generate significant Wind Over the Deck (WOD) for normal operation. It has been said that when Super Hornets operated from the French Charles de Gaulle, they had to launch with less than normal fuel loads to keep the weight down for safe operation.

    Given than the Gripen already flies what is essentially a carrier approach and landing for its STOL operation, the proposed "Sea Gripen" might put it in good stead for a Brazilian Navy (as well as others') carrier order.

  3. I think you mean South Korea and not North Korea.

  4. Tax Payer (FIN)7 March 2014 at 14:55

    The All Knowing wikipedia says about Gripen Engines:

    My guess is also on the carrier capability development of Gripen E/F as one main reason for Saab-Boeing co-operation.