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. Last Updated: 07/27/2016

Boeing, Lockheed Eye Jet Prize

WASHINGTON -- The U.S. Defense Department has chosen Lockheed Martin Corp. and Boeing Co. as the finalists in a competition to build a new generation of jet fighters, an 11-year project that could bring the eventual winner more than $200 billion to produce 3,000 aircraft.

The competition to build the "joint strike fighter" will be a major factor in determining which firms emerge as the dominant aerospace companies of the 21st century. In the aftermath of the Cold War, this may be the last new jet fighter ordered for decades.

A third competitor, McDonnell Douglas Corp., was eliminated from the competition. The St. Louis-based company headed a development team that included Northrop Grumman Corp. of Los Angeles, and both companies now face a less secure future. They are likely to experience diminishing orders, and will be hard-pressed to maintain their current strong market shares, analysts said.

Under the contracts announced Saturday, Lockheed Martin and Boeing each will receive about $1.1 billion to develop "demonstrator aircraft" for the armed services. Seattle-based Boeing will manufacture its version at Puget Sound. The government will choose between the two competing prototypes in 2001.

The winner of the final production contract will supply the military with the dominant fighter aircraft of the early 21st century, with the first jets to be delivered in 2008. The new aircraft eventually will replace five different jets used by the Air Force, Navy, Marines and the British Royal Navy.

The new jet will enable the United States to dominate the air over the battlefields of the future, said Defense Secretary William Perry. Control of the air was a key aspect of the Persian Gulf War. "We had it, we liked it and we are going to keep it,'' Perry said at a Pentagon news conference.

The planes will cost an average of about $70 million each, including development and production.

Lockheed Martin, based in Bethesda, Maryland, builds the F-16 fighter for the Air Force, and has won the contract award for the F-22 fighter.

Lockheed Martin "is clearly the incumbent," said Wolfgang Demisch, aerospace analyst for Bankers Trust Research. He predicted that the company will try to maximize common elements between the F-22 and the joint strike fighter to make the new aircraft "as inexpensive as possible.''

Working with Lockheed Martin will be Pratt & Whitney, the engine supplier, and Rolls-Royce and Allison Development, which will build a special fan system for jet versions that land vertically.