The lineup now appears set in the race for the biggest defense contract ever: British Aerospace will join Lockheed Martin's effort to build the Joint Strike Fighter, the companies said yesterday.
The much-anticipated announcement pits the top defense contractors in Europe and North America against a team led by Boeing Co. in an effort to build a 21st century aircraft worth about $300 billion.
Boeing had sought the hand of British Aerospace, seen as a must-have partner because the British navy is one of four customers for the Joint Strike Fighter -- along with the U.S. Air Force, Navy and Marines.
What's more, the partnership -- which was announced at the semi-annual Paris Air Show -- is a boost for Lockheed Martin in the increasingly crucial international aerospace marketplace.
"The decision was larger than just the JSF [Joint Strike Fighter] decision. It reflects interest on the part of British Aerospace to form a larger and longer-term understanding with the leading defense company in the U.S.," said defense analyst Brett Lambert of the consulting group DFI International.
Lockheed Martin executives has been holding discussions about partnering on both military and commercial aircraft with the European consortium Airbus Industrie, of which British Aerospace is a member.
Just as Boeing is trying to get military work to offset the cyclical nature of the commercial market, while Lockheed is taking a look at commercial aircraft as defense budgets decline.
"This agreement supports our objective of forming mutually beneficial, long-term international partnerships," said Norman R. Augustine, Lockheed Martin's chairman and chief executive officer.
Calling the Joint Strike Fighter "the most significant trans-Atlantic military program of the 21st century," Sir Richard Evans, chief executive of British Aerospace, said his company is "delighted to have reached agreement with Lockheed Martin and look[s] forward to making a significant contribution."
British Aerospace brings experience as the maker of the Harrier jump jet, the only fighter plane in the world that lands and takes off vertically.
One version of the multirole Joint Strike Fighter will need that capability. As the only fighter aircraft the Pentagon has in the works for the mid-21st century, the JSF contract has become the Holy Grail of warplane builders.
When the Pentagon eliminated McDonnell Douglas Corp. from the JSF competition last fall, the St. Louis company almost immediately threw itself into the arms of Boeing in a proposed $15 billion merger.
Northrop Grumman Corp. and British Aerospace were also partners on that failed team, and both now have cast their lot with Lockheed Martin.
Some analysts viewed the British Aerospace decision as a surprise, because the company has had a lengthy relationship with McDonnell Douglas in the construction of the Harrier.
"From everything I understand from both companies, that was very positive and continues to be a very positive experience," Lambert said.
Viewed another way, though, the shape of the teams was inevitable.
"Lockheed Martin has never had any experience with Navy aircraft, and so they had to get both Northrop . . . and British Aerospace," said analyst Paul Nisbet of JSA Research Inc.
Now, Nisbet said, the two teams chasing the Joint Strike Fighter contract are on even footing. They are operating under separate contracts of roughly $700 million to produce two prototypes each, with a final winner to be picked in 2001.
Boeing has the advantage of a more innovative design, plus the efficiencies of its vast commercial experience and the long heritage of McDonnell Douglas fighter planes, such as the F-15 and the F/A-18.
Lockheed Martin has a more conventional design based partly on its new F-22 fighter plane, as well as the electronics and Navy experience of Northrop Grumman and now the British connection.
Its new team members may bring something else, Nisbet said: "Some good ideas of what McDonnell Douglas brings to the table with Boeing."
He said all the heavy breathing over the contest may be for nothing, though.
If the Joint Strike Fighter really is the only warplane the nation builds after about 2010, the Pentagon will probably want to spread the wealth.
"I wouldn't be a bit surprised 10 years from today if they decided that both firms should produce this fighter plane," he said.
Pub Date: 6/19/97
