Boeing gets lifeline in deal for most expensive jet fighter ever

The U.S. is entrusting its most expensive jet fighter program in history to a company that hasn't successfully launched a commercial or military aircraft in a decade.

- Sharon Terlep

Boeing was selected last week by the Pentagon to build the Air Force's next-generation manned jet fighter, beating out Lockheed Martin in a move that surprised Wall Street and left Lockheed disappointed.

The Pentagon's decision couldn't come at a more crucial time for Boeing, which is trying to pull itself out of a nose dive after a series of safety problems with its 737 MAX jet, a crippling strike and six straight annual losses. Not only did Boeing lock down a contract that could top $50 billion, the deal is structured to guarantee a profit through the development stage of the project—something Boeing sorely needs.

Boeing's defense business represents around one-third of the company's revenue but has lost billions of dollars over the past several years, while Boeing says it has been locked into money-losing Pentagon contracts. The new manned fighter, dubbed the F-47, is designed to fight with semiautonomous drones and will have new stealth and long-range strike capabilities. It is the type of sophisticated air-to-air warplane the Air Force says is vital to deterring China's military in the decades ahead.

Boeing wasn't the obvious choice to build the next-generation jet fighter. "It's not the fighter central that it once was," Bank of America analyst Ron Epstein said of Boeing, adding that the company would need to hire engineers capable of pulling off the project.