Battle joined

WITHIN the next few months, the biggest defence contract for what will probably be many years to come will be awarded by the US Air Force, to build a new long-range strike bomber. The B-3, as it is likely to be named, will be a nuclear-capable aircraft designed to penetrate the most sophisticated air defences. The contract itself will be worth $50 billion-plus in revenues to the successful bidder, and there will be many billions of dollars more for work on design, support and upgrades. The plan is to build at least 80-100 of the planes at a cost of more than $550m each.

The stakes could not be higher for at least two of the three industrial heavyweights that are slugging it out. On one side is a team of Boeing and Lockheed Martin; on the other, Northrop Grumman. The result could lead to a shake-out in the defence industry, with one of the competitors having to give up making combat aircraft for good.

After the B-3 contract is awarded, the next big deal for combat planes—for a sixth-generation “air-dominance fighter” to replace the F-22 and F-18 Super Hornet—will be more than a decade away. So Richard Aboulafia of the Teal Group, an...



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