Boeing Excluded From US Air Force’s ‘Doomsday Plane’ Project, Spotlight On Sierra Nevada For SAOC Contract – Boeing (NYSE:BA)


Boeing Company has reportedly been excluded from the U.S. Air Force’s competition to develop the successor to the E-4B Nightwatch, commonly known as the “Doomsday Plane” for its nuclear war resilience. This decision, confirmed by Boeing on Friday, significantly changes the dynamics of the contest to build the aircraft’s next version, according to a news report by Reuters.

The privately-held defense contractor Sierra Nevada Corp is now the only publicly known contender for the Survivable Airborne Operations Center (SAOC) contract. This contract aims to replace a fleet that has been operational since the 1970s. The Air Force, targeting a 2024 award date for the SAOC contract, has refrained from commenting on whether there were other bidders besides Sierra Nevada Corp.

“We cannot discuss an active source selection and detailed program information is classified,” an Air Force spokesperson told Reuters.

According to two sources familiar with the matter, Boeing and the Air Force could not reach an agreement on data rights and contract terms. Boeing was reportedly unwilling to commit to a fixed-price contract that would require the company to cover costs exceeding a predetermined limit.

“We are approaching all new contract opportunities with added discipline to ensure we can meet our commitments and support the long-term health of our business,” Boeing said in a statement to Reuters. “We remain confident our SAOC approach is the most comprehensive, technically mature, and lowest-risk solution for the customer and Boeing.”

This exclusion comes as Boeing’s defense unit has faced significant financial challenges. It has lost $1.3 billion this year on fixed-price development programs, including NASA’s Starliner and the next Air Force One. Since 2014, Boeing has lost $16.3 billion on fixed-price programs, according to a Reuters review of the company’s regulatory filings.

The E-4B fleet, currently operated by the Air Force, consists of four highly-modified Boeing 747-200 jumbo jets. These aircraft, which date back to the 1970s, are becoming increasingly difficult and expensive to maintain due to the obsolescence of parts. The fleet is expected to reach the end of its service life in the early 2030s.

In terms of stock performance, Boeing shares closed higher by 0.97% to $233.87 on Friday. After-hours trading saw a gain of 0.42% to $234.86.

It remains to be seen how this exclusion from the competition will impact Boeing’s defense unit and its future contracts. However, the decision has certainly shaken up the contest for the development of the successor to the E-4B Nightwatch, leaving Sierra Nevada Corp as the sole known contender for the SAOC contract.

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