Boeing and Lockheed Martin Are the Big Winners in Trump’s Defense-Heavy Budget

Reuters

Mar 16, 2017

Nearly half of President Donald Trump's 2017 $30 billion supplemental defense budget proposal would go to buy and modernize warplanes, warships and missiles, a down payment on Trump's promises to boost military spending.

Although Congress must approve the $13.5 billion request and is likely to make changes, Boeing (BA, +1.07%) would be one of the biggest beneficiaries of the administration's proposal, which included $2.3 billion for 24 F/A-18 E/F Super Hornet jet fighters. This is 10 more than the U.S. House of Representatives approved on March 8 in its 2017 base spending bill.

The Navy will use the additional money to bolster its aging fleet of fighters, Lieutenant General Anthony Ierardi, the director of Force Structure, Resources and Assessment for the Joint Chiefs of Staff, told Reuters.

In a Dec. 22 tweet, before he was inaugurated, Trump had suggested buying more Boeing F/A-18s, which he called "comparable" to the Lockheed Martin F-35, despite the fact that the F-35 is a stealth aircraft difficult for enemy radar to detect. The 1990s-vintage F/A-18 does not use stealth technology.

The Navy also proposed $920 million to buy six Boeing P-8 submarine-hunting aircraft. The Army requested $708 million for 20 Boeing Apache attack helicopters.

Lockheed Martin (LMT, +1.51%) is also one of the big winners in the administration's proposal.

Pentagon officials said the request for additional 2017 funds would help accelerate planned acquisitions of F-35 Joint Strike Fighters. The Pentagon budgeted $596 million to buy five of the stealthy jets, which cost between $95 million and $123 million each, depending on the model.

In the past, President Trump had complained about the "tremendous cost and cost overruns" of the F-35 program, which is the Pentagon's most expensive weapons program.

The Pentagon budgeted $151 million for Lockheed's THAAD missile defense and $376 million for 17 Blackhawk helicopters made by Sikorsky Aircraft, a Lockheed subsidiary.

The proposal also requested $433 million to complete the third version of the DDG-51 Navy destroyer being built by General Dynamics at Bath Iron Works in Maine. A General Accounting Office report published on Aug. 4 said the Navy "has not demonstrated sufficient acquisition and design knowledge" to provide an accurate estimate of the vessel's cost.

The administration's supplemental request takes the base Pentagon budget for fiscal 2017 to $541 billion, analyst Robert Stallard of Vertical Research said in a report on Thursday.

Congress will likely consider the request before April 28, when the current Defense Department funding expires.