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Sources: Boeing, Saab in Talks to Partner on Trainer Bid

Sep. 9, 2013 - 03:08PM   |  
Help From Sweden: Sources say Boeing and Saab are in talks to partner on a bid in the US Air Force's competition to replace its T-38 Talon trainer aircraft.
Help From Sweden: Sources say Boeing and Saab are in talks to partner on a bid in the US Air Force's competition to replace its T-38 Talon trainer aircraft. (US Air Force)
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WASHINGTON — Boeing and Saab are discussing a partnership on the US Air Force’s trainer replacement program, multiple industry sources have told Defense News.

If the arrangement goes forward, it opens the door for each to capture a long-delayed, highly prized Air Force contract to replace its aging T-38 trainers. The service intends to purchase 350 new trainers, likely pushing the contract award into the billions of dollars.

Talks between the companies are advanced and likely to lead to an agreement, the sources said. One said the deal is being held up primarily as a result of an Air Force decision to delay the program due to budget woes.

One source in Sweden indicated talks are likely occurring at the highest levels of the company, with a small group of executives driving the early stages of a potential deal. Those are likely what the source called the “Håkan Triangle,” with Saab CEO Håkan Buskhe, highly influential industrialist chairman Marcus Wallenberg and Micael Johansson, head of Electronic Defense Systems.

“It can stay in the loop and away from our wars for months,” the source said. “That’s how Saab works when generating major new business.”

Boeing has teamed with Saab on commercial products in the past, but a teaming arrangement to bid for the T-X program would mark the first major partnership between the two on a new military platform, where they have been fierce competitors.

Saab’s JAS 39 Gripen and Boeing’s F/A-18 Hornet have gone head-to-head in a series of international fighter competitions, including Thailand, the Czech Republic, India and Switzerland., Both are contenders to replace Denmark’s fleet of F-16 fighters.

Representatives for both companies did not deny that the companies were talking, but would not confirm specifics.

“We have multiple discussions with Boeing regarding potential business opportunities just like we do with all the other major players out there,” said John Belanger, senior vice president for communications with Saab North America. “That is no different from how we interact with Lockheed Martin or Raytheon. Should any of those discussions result in a definitive agreement to cooperate in a project with any of these partners, we would release more information at that point.”

Karen Fincutter, Boeing spokeswoman, added in an e-mail: “We have conducted extensive studies of both new and existing platforms as well as many industry teaming approaches” for T-X. “Any teaming relationship will be announced at the appropriate time.”

Boeing has previously indicated it intends to submit a “clean-sheet” design for the T-X competition. But a Boeing-Saab T-X bid offers the potential of a design based on the compact Gripen airframe, which is already close in size to a trainer. Removing weapons and electronic-warfare systems, and scaling down the engine could yield an aircraft matching the requirements for T-X.

Saab has struggled to expand the market for the Gripen, so opening a path to a trainer variant could give the general design new life. But even if the design is not based specifically on Gripen, it would draw on that technology and experience.

One source said Boeing is attracted to Saab’s long history of design expertise, especially in lighter aircraft, as well as its global contacts that could give the American giant access to new markets.

Richard Aboulafia, an analyst with the Virginia-based Teal Group, said pairing Boeing and Saab would be a “win-win” for both.

Winning the T-X competition would give Saab an entry into the American market and a needed injection of new revenue. It could also open future international sales, as US allies would look favorably on whatever trainer the Americans select.

For Boeing, a deal with Saab allows the company to share the financial risk and burden of a new aircraft design with a partner and gives it access to Saab’s trainer experience, built through the years of developing and maintaining Sweden’s indigenous Saab 105 trainer.

“Saab has a minimal market space, but they have a lot of experience in two specific areas,” Aboulafia said. “Creating and supporting their indigenous trainer, and the creation of a light combat aircraft with the Gripen.”

While Boeing’s F-15 and F/A-18 Super Hornet have stronger international penetration than the Gripen, those airframes are nearing the end of their market lives, Aboualfia said. Boeing cannot afford to sit back and rely on its legacy portfolio, but needs to prepare for a future after its legacy products phase out.

“Both would benefit equally,” Aboulafia said. “Saab really needs to do something to break out of this small Gripen niche, and Boeing needs a military airframe win.”

The US Air Force is targeting a request for proposals on its next trainer by fiscal 2016, with Air Force Chief of Staff Gen. Mark Welsh telling a May 8 Senate hearing that his office is looking at initial operational capability (IOC) in “fiscal year 2023 or 2024.”

“It’s critical” to replace the T-38, Welsh said during his May testimony. “It’s part of the fabric of the Air Force. The T-38 replacement is kind of like the tide — it’s coming, we just have to figure out when. Right now, the problem is finding the funding, based on other priorities.”

USAF officials had hoped to achieve IOC in 2020, but sequestration budget cuts have pushed that date back. Further delays are possible as the trainer competes with other modernization priorities. While not ideal, Welsh expressed confidence that the service could continue using the T-38 through the late 2020s if need be.

Other competitors for T-X include the Hawk Advanced Jet Training System, a joint program of BAE Systems and Northrop Grumman; Lockheed Martin’s offering of the Korean Aerospace Industries T-50; and the T-100, a collaboration between General Dynamics and Italy’s Alenia Aermacchi.

All three offerings feature systems already operating around the globe.

Gerard O’Dwyer in Helsinki contributed to this report.

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