Boeing Company BA has been reportedly excluded from the U.S. Air Force's competition to develop the successor to the E-4B Nightwatch, often referred to as the "Doomsday Plane" for its nuclear war resilience.
This development, confirmed by Boeing on Friday, significantly alters the dynamics of the contest to build the aircraft's next version, according to a news report by Reuters.
This decision positions the privately-held defense contractor Sierra Nevada Corp as the only publicly known contender for the Survivable Airborne Operations Center (SAOC) contract.
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This contract aims to replace a fleet that has been operational since the 1970s, the report read.
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, the current manufacturer of the E-4B, and the Air Force could not reach an agreement on data rights and contract terms, according to the outlet.
The sources revealed that Boeing was unwilling to commit to a fixed-price contract that would require the company to cover costs exceeding a predetermined limit, it added.
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"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."
Boeing's defense unit has lost $1.3 billion this year on fixed-price development programs that include NASA's Starliner and the next Air Force One, the report added.
It has lost $16.3 billion on fixed-price programs since 2014, according to a Reuters review of Boeing's regulatory filings.
The Air Force currently operates a fleet of four E-4B aircraft, with at least one always on alert. These highly-modified Boeing 747-200 jumbo jets, dating back to the 1970s, are becoming increasingly challenging and costly to maintain due to the obsolescence of parts.
The E-4B fleet is anticipated to reach the end of its service life in the early 2030s.
Price Action: BA shares closed higher by 0.97% to $233.87 on Friday. Shares gained 0.42% to $234.86 after hours.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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