Major setback for The Boeing Company (NYSE:BA)
In a major setback, The Boeing Company (NYSE:BA) bid has been rejected by the South Korean government to supply fighter jets to the country. The government bowed down to public pressure and rejected Boeing’s bid, which was said to be the only under-budget bid for supplying BA’s F-15 Silent Eagle to South Korea.
It is reported that about 15 former South Korean air force chiefs, earlier this month, agreed to a petition to oppose BA’s F-15 Silent Eagle, citing concerns over the capabilities of the planes.
With the rejection of Boeing Company (NYSE:BA), the South Korean government said it would restart the $7.7 billion tender process to get about 60 advanced fighter jets.
The multi-billion tender offer now brings Lockheed Martin Corporation’s (NYSE:LMT) F-35A planes to the forefront, which was otherwise considered too expensive earlier.
However, after the current development, South Korean government said it will restart the entire project from scratch that would also include re-assessment of the budget. And, the whole process is expected to take approximately one year, but the country, at the same time, promises to expedite the project.
The project review would also see defence ministry officials, air force, and agency working together on re-assessment of the tender and may consider several alternatives, including changing the number of planes, according to reports.
On the rejection, Boeing stated it was deeply disappointed by the decision of South Korea’s government, saying the company followed South Korea’s Defense Acquisition Program Administration (DAPA) instructions throughout the process. Boeing was confident of winning the tender, which was supposed to be announced on Tuesday, but the South Korean government decided to announce the opposite.