Boeing Co. views the low-ball bids that helped it win contracts for a Navy drone and an Air Force training jet as spending money to make money.
While the Chicago-based planemaker wrote down third-quarter profits in its defense unit by $691 million to cover costs on initial work for the MQ-25, an unmanned refueling tanker that can take off and land on an aircraft carrier, and the T-X trainer for Air Force fighter pilots, Chief Executive Officer Dennis Muilenburg says the two programs offer a potential $60 billion long-term revenue stream.
"This is a targeted and very deliberate strategy focused on some key defense franchises that we believe have life-cycles that are measured in decades," he told investors last week. "We still see our defense business as a modest growth business. It’s healthy, and the recent wins are going to make it even more healthy."
Indeed, landing contracts for military aircraft likely to be in use for much of the century revitalizes a Boeing business that had relied heavily on production of older models after losing the lucrative F-35 fighter to Lockheed Martin and the B-21 long-range bomber to Northrop Grumman.
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