The U.S. Air Force’s once-crowded $16 billion T-X next-generation trainer competition is beginning to look more and more like a price shootout between the Lockheed Martin/Korea Aerospace Industries T-50A and Boeing/Saab BTX after Northrop Grumman expressed mixed feelings about entering the race.
What started out as six potential entrants including Raytheon/Leonardo, Sierra Nevada Corporation/Turkish Aerospace Industries and Textron Aviation prior to the Dec. 30 request for proposals has narrowed to five and perhaps fewer after the Raytheon/Leonardo team withdrew its M-346 Master-based T-100 offer.
The two firms left T-100 partners CAE USA and Honeywell Aerospace, as well as the town of Meridian, Mississippi, in the lurch on Jan. 25 when they abandoned T-X, having failed to come to a business agreement over the cost of the Italian aircraft, which Raytheon believed needed to be substantially lower to be competitive.
On Jan. 26, when asked if Northrop would bid, company CEO Wes Bush surprised some T-X watchers by saying no decision has been made either way, despite substantial investment in a flying prototype. “We don’t want to walk ourselves into a decision to do something just because we’ve been doing it,” he said.
Sierra Nevada has avoided saying whether its “Freedom Trainer” will enter the race, and Textron Aviation also will n0t say definitively if a Scorpion-based offer is on the table.
One industry source tells Aviation Week that the T-100 needed to be the low-cost option for the Air Force to have a fighting chance against Boeing and Lockheed.
Raytheon, which produced the T-1A Jayhawk and T-6A Texan II, exited the aircraft manufacturing business in 2006 when it sold Hawker Beechcraft, now owned by Textron Aviation. The firm would have been Leonardo’s U.S. face for the T-100, acting as prime system integrator and driving toward 70% American content on the aircraft.
The team announced its partnership in February 2016 and looked solid until October, when Aviation Week reported disagreements over control of the bid. The source says Leonardo’s aircraft and helicopter divisions, Finmeccanica Alenia Aermacchi and AgustaWestland, respectively, are “not the easiest partners” and do not like relinquishing control of their products to teammates. Alenia Aermacchi had been teamed with General Dynamics for T-X, but split and reformed with Raytheon.
“[The M-346] is probably the most proven of the competitors, [but] Leonardo and Raytheon were several million dollars apart from what [unit price] they wanted,” the source says.
Just last month, Raytheon held a ceremony at Key Field in Meridian—where it hoped to complete assembly of the aircraft—to drum up support for the T-100 among local politicians and business leaders.
A spokesman for Mississippi Sen. Thad Cochran (R) expressed disappointment about the breakup, but was not totally disheartened. “Because of this process, there’s no question that we are poised to meet future opportunities [in high-tech aerospace manufacturing],” the spokesman says.
CAE, one of the leading providers of aircraft training and simulation services, says it is disappointed that the T-100 will not compete. The Canadian firm’s U.S subsidiary in Tampa, Florida, would have provided the ground-based training system. It typically competes against FlightSafety International, L-3 Link Simulation & Training, and Boeing and Lockheed’s in-house training services businesses for U.S. military training contracts. L-3 Link is partnered with Northrop, and Boeing and Lockheed are leveraging their own training and simulation capabilities. Sierra Nevada has not disclosed its teaming arrangements.
“We would welcome supporting the eventual T-X winner with our advanced simulation technologies and training support capabilities,” CAE says.
The T-100 split has dashed Honeywell’s hopes of resuming production of its F124 low-bypass turbofan engine in the U.S. The F124 was militarized from Honeywell’s commercial TFE731 business jet engine for Taiwan’s Indigenous Defense Fighter, and it now also powers the M-346 and Aero Vodochody L-159. Honeywell opened an American assembly line in Phoenix, Arizona, to build engines for Israel’s M-346 training fleet, and would have resumed production there if Raytheon won T-X.
“For Honeywell, it’s easy to shrug off,” says Richard Aboulafia, vice president of analysis at Teal Group. “This was only a combat engine by accident when the Taiwanese adopted it for their fighter program a long, long time ago. For CAE, their business is going very well, so they should be able to shrug it off, but it hurts; it hurts to be a big training company and not be part of the biggest training competition in the world.”
Loren Thompson of the Lexington Institute said the break with Leonardo was a “smart move” by Raytheon because of the economics and Leonardo’s shaky track record of partnering with American companies, citing the failed the Lockheed/AgustaWestland AW101-based VH-71 Kestrel presidential helicopter project. “Leonardo had an integrated training solution before Raytheon even came along,” he says, “but there’s a price of admission for getting into this market that requires getting along with one of the major U.S. system integrators.”
Aboulafia and Thompson agree that it could come down to a price war between Lockheed and Boeing, although the two firms have different motivations and market forecasts.
The T-50A is an already-fielded, high-performance aircraft that easily could be adapted to other missions such as light combat or aggressor training support, whereas Boeing and Saab have developed a purpose-built trainer aircraft. Boeing is hungry for a military aircraft win after losing the Joint Strike Fighter contract to Lockheed in 2001 and the Long-Range Strike Bomber to Northrop in 2015.
“Boeing does have a significant development bill, but boy, are they hungry for a military airframe win,” Aboulafia says.
Thompson says if price does become the main discriminator for T-X, it might be wise for Northrop to sit this competition out, since it significantly underbid the Boeing/Lockheed team to win the bomber contract and might be exposed to too much financial risk with another development program. “Taking a big risk dampens your enthusiasm for more such bidding,” he says.
Aboulafia says just because Northrop invested in a clean-sheet prototype does not mean it must bid. “Any economist is going to tell you that the sunk cost fallacy is the biggest fallacy of all,” he says.
Bush expressed such sentiments during the earnings call. “While it’s interesting enough that we have made some investments supporting this program, [these] investments tend to have broader applicability, so we need to be thoughtful.”
The Air Force is seeking 350 next-generation trainers over 11 annual batches to replace upward of 450 Northrop T-38 Talons for undergraduate fighter and bomber pilot training. The T-38 was introduced in 1961, and T-X service entry is due by late fiscal 2024 “or earlier,” the service says.