Boeing Commercial Airplanes Achieves 2009 Delivery Target, Maintains Strong Backlog

* Company delivers 481 airplanes in tough economy
* Robust backlog continues with 3,375 airplanes

Defense News ~ SEATTLE, - January 07, 2010: Boeing (NYSE: BA) recorded 481 commercial airplane deliveries in 2009, matching the company guidance of 480-485 airplanes. The Commercial Airplanes backlog remains strong at 3,375 airplanes. Boeing registered 263 gross and 142 net commercial orders for the year as air travel and freight declined and carriers worldwide experienced severe economic challenges.The Next-Generation 737 continued its reign as the industry workhorse with 372 deliveries. The airplane also topped Boeing's order book with 197 gross orders as carriers chose the 737's efficiency and versatility for future fleet needs. The 777 led Boeing's twin-aisle programs as operators chose the most reliable and efficient twin-aisle jet flying today.

The global recession presided as an oppressive market reality in 2009, driving many carriers to re-evaluate their near- and medium-term fleet requirements. Program orders, deliveries and backlog at the end of 2009 were as follows:

...............Gross.......... Orders Net.......... Orders Deliveries.......... Backlog Units

737 ........197.................. 178 ...........................372................................2,076

777 .........30.................... 19 .............................88................................... 281

747 ............5...................... 2................................ 8................................... 108

767 ............7...................... 2................................ 13.................................... 59

787 ..........24................... -59............................ N/A.................................. 851

First flight of the 787 Dreamliner took place Dec. 15, with first delivery scheduled for fourth-quarter 2010. The 747-8 Freighter is slated for first flight early this year with first delivery planned for fourth-quarter 2010. Delivery of the 747-8 Intercontinental passenger airplane is planned for fourth-quarter 2011.

"2009 was not without its challenges but it also was a year of exciting achievements for our company and our industry," said Jim Albaugh, Boeing Commercial Airplanes president and chief executive officer. "With signs of economic recovery emerging in 2010, we look forward to better days ahead."

Boeing expects to provide 2010 commercial airplane delivery guidance when the company releases year-end earnings Jan. 27.

Boeing Commercial Airplanes highlights in 2009 included:

*First flight of the 787 Dreamliner.

*3,000th delivery of the Next-Generation 737.

*The first 777 Freighter delivered to launch customer Air France.

*Delivery of the 1,400th 747 as the program celebrated its 40th anniversary.

*Boeing and the U.S. Navy formally unveiled the P-8A Poseidon - a derivative of the Next-Generation 737 - for the service's newest maritime patrol and reconnaissance aircraft.

*Significant progress among Boeing and its partners in studying sustainable biofuels.

*Boeing Training & Flight Services (formerly Alteon) introduced its new name and branding to highlight its expanded capabilities.

*Boeing Shanghai Aviation Services expanded its maintenance, repair and overhaul (MRO) operations with the opening of a new hangar at Shanghai's Pudong International Airport.

*The 737-700C (Convertible) became the first member of the Next-Generation 737 family to be offered in both an all-passenger and all-cargo layout.

A detailed report of Boeing Commercial Airplanes orders and deliveries is available on the Web at http://active.boeing.com/commercial/orders/index.cfm

Govt officials to meet on A400M on Jan. 15 -sources

* Meeting to take place in London - source
* Countries that ordered A400M aim for solution by end-Jan
* EADS unlikely to get full 5.3 bln eur concessions -paper
(Adds EADS comment, sources on timing, location of next week's meeting)
Defense News ~ FRANKFURT, Jan 7 (Reuters) - Officials from countries that ordered the delayed A400M military transport plane from Airbus will meet again next week to discuss a possible financing deal, several sources close to Airbus and the German government said on Thursday.
The 20 billion euro ($28.7 billion) project, which has been about 25 years in the making, hangs in the balance as some of the seven ordering nations hold out for resolution of a dispute that earlier this week saw Airbus lock horns with Germany.
The A400M, which has been ordered by Germany, France, Britain, Spain, Belgium, Luxembourg and Turkey, has become far more expensive to make than initially been anticipated.
Negotiators say Airbus parent EADS (EAD.PA) has asked the NATO buyers to contribute 5.3 billion euros ($7.6 billion) of additional funds to make the A400M and offered to bear a similar increase in development risks.
The countries, meanwhile, were already disgruntled as the A400M's maiden flight last month was two years behind schedule following delays in engine development and other snags that manufacturers blame partly on political interference.
Germany has put up resistance to EADS's demands for increased funding, saying the nation would not contribute more than a further 650 million euros set out in its contract to cover inflation and surcharges.
A spokesman for EADS said on Thursday: "From our perspective, everything has been said on the topic of the A400M. There is nothing more to say."
MEETING IN LONDON
The countries aim to reach a financing deal before a standstill agreement expires at the end of January. Airbus chief Thomas Enders last week told a German newspaper that it was time for movement now.
One person told Reuters on Thursday that next week's meeting, scheduled for Jan. 15, would take place in London, a change of scenery from last month's venue in Berlin.
Britain has recently softened its stance toward Airbus in the A400M dispute. It had initially threatened to cancel all or part of its order on the delays, but recently called on Airbus to deliver all planes without any increase in the overall cost.
FT Deutschland earlier on Thursday reported that EADS was unlikely to receive the full 5.3 billion euros it has requested. But it cited industry sources as saying that it would be offered enough to make it impossible to refuse a deal.
It said it was almost certain by now that the nations would waive rights to a 1.3 billion euro price cut they were entitled to because of the delays in the delivery of the plane.
Also, Airbus is expected to attempt to make best use of its own political trump cards, since axing the programme could put at risk 40,000 European jobs, with the highest proportion in Germany.
(Reporting by Maria Sheahan in Frankfurt; Additional reporting by Markus Wacket in Berlin; editing by John Stonestreet)

Germany, France winners in EU satellite order

* OHB System wins 566 million euro satellite order
* Arianespace secures 397 million euro contract for launches
* Thales Alenia Space wins 85 million euro support contract

Defense News ~ By Pete Harrison
BRUSSELS, Jan 7 (Reuters) - Germany's OHB Technology (OHBG.DE) will provide 14 satellites for the European Union's Galileo navigation system and Arianespace (EAD.PA) of France will launch them into orbit, the EU executive said on Thursday.
Support services for Europe's biggest space programme will be provided by Franco-Italian group Thales Alenia Space (TCFP.PA) (SIFI.MI) in a contract worth 85 million euros ($122 million), the European Commission said in a statement.
"2014 is the year we will get it started," European Transport Commissioner Antonio Tajani told reporters. "The first services will be available as of 2014, and then progressively we will be adding more."
The Galileo project, intended to rival the U.S. global positioning system, has been plagued by delays and squabbling over funding that only ended when the 27-nation EU agreed to fund it from the public purse.
OHB secured its order, worth 566 million euros, after a competition with Germany's EADS-Astrium. The two will continue to compete for orders for the remaining satellites in the programme, which will probably number between eight and 18.
Arianespace will be paid 397 million euros to launch the satellites onboard Soyuz rockets from French Guiana starting in October 2012.
Tajani was unable to give a figure for the total cost of the project -- initially estimated at over 3 billion euros -- but he said it was in line with the most recent budgets.
"We can now focus on the actual roll-out," he said. "What remains to be seen is whether costs for launches increase."
OHB, working in partnership with British-based, French-owned Surrey Satellite Technology, was expected to deliver its first satellite by July 2012 with the last delivered in March 2014.
"It will be compatible with the GPS system," said Tajani. "It will in fact adjust or correct the GPS signal and make it more accurate."
"Galileo is a system we intend to turn into a global system... and this is the reason we are working with the Chinese and other partners," he said.

(Editing by Dale Hudson and Dan Lalor)

US clears arms sale to Taiwan despite China's ire

Defense News ~ By Ralph Jennings and Ben Blanchard
TAIPEI/BEIJING, Jan 7 (Reuters) - The United States has cleared a sale of advanced Patriot air defence missiles to Taiwan despite opposition from rival China, where a military official proposed sanctioning U.S. firms that sell arms to the island.
The U.S. defence department announced the contract late on Wednesday, allowing Lockheed Martin Corp (LMT.N) to sell an unspecified number of Patriots, Washington's de facto embassy in Taipei said.
The hardware, some of the best in its class, could shoot down Chinese short-range and mid-range missiles, defence analysts say.
The sale rounds out a $6.5-billion arms package approved under then U.S. President George W. Bush in late 2008, said Wendell Minnick, Asia bureau chief with Defense News.
"This is the last piece that Taiwan has been waiting on," Minnick said.
China has urged the United States to cancel any planned arms sales to Taiwan to avoid damaging ties with Beijing, and a Chinese Foreign Ministry spokeswoman, Jiang Yu, swiftly denounced the missile deal.
"We have already made stern representations to the U.S. side, and we have urged the United States to clearly recognise the serious harm caused by arms sales to Taiwan," Jiang told a regular news conference in Beijing.
Meanwhile, Chinese Vice Admiral Yang Yi told the China News Service that though developing good ties between China and the United States was important, some things could not be accepted.
"You can't just be forebearing and conciliatory when it comes to the development of stable and healthy Sino-U.S. relations, and especially when it comes to a question of principles you should never blindly make concessions," he said.
Some U.S. companies which sell weapons to Taiwan also want to sell aircraft and other goods to China, added Yang, who is also a researcher at the Chinese National Defence University's Strategic Studies Institute, without naming any firms.
"Why don't we take defensive countermeasures against them? Apart from just protesting to the U.S. government and taking necessary steps, why don't we put sanctions on these troublemakers?"
China has claimed sovereignty over self-ruled Taiwan since 1949, when Mao Zedong's Communists won the Chinese civil war and Chiang Kai-shek's Nationalists fled to the island. Beijing has vowed to bring Taiwan under its rule, by force if necessary.
The United States switched diplomatic recognition from Taipei to Beijing in 1979, recognising "one China". But it remains Taiwan's biggest ally and is obligated by the 1979 Taiwan Relations Act to help in the island's defence.
"Taiwan's defence ministry looks favourably at the U.S. continuing to sell Taiwan weapons for its self defence," Taiwan military spokesman Martin Yu said. Taiwan estimates China is aiming 1,000 to 1,500 missiles at the island.
(Editing by Chris Buckley and Jerry Norton)

Lockheed says F-35 program not in trouble

* Four more test aircraft to be delivered
* Pentagon cost estimate said lowered by $1 bln
* More conservative budgeting spurred by acquisition law (Adds quotes, background on program, analyst comment, byline)

Defense News ~ By Andrea Shalal-Esa
WASHINGTON, Jan 6 (Reuters) - Lockheed Martin Corp (LMT.N) on Wednesday said it was continuing work to sharply reduce the costs of the F-35 fighter and did not believe the program was in trouble despite a report that the Pentagon will cut production of 122 airplanes through 2015.
Lockheed spokesman Chris Geisel said the company was running about four to six months late on finishing the final four of 19 developmental aircraft, which in turn prevented completion of all the flight tests planned by the end of 2009.
But he said the gap was narrowing between Pentagon and Lockheed projections about the cost and time required to complete the development program and the company was continuing its drive to lower overall costs on the program.
"It is Lockheed Martin's intent to continue the ongoing steep reductions in F-35 cost during low-rate initial production so that the government can buy more aircraft within the existing budget," Geisel said.
Concerns about the F-35 program -- the Pentagon's most expensive weapons program at roughly $300 billion -- have mounted in recent months, amid declining tolerance by Pentagon officials and lawmakers for cost overruns and schedule delays.
Last month, the U.S. Senate Armed Services Committee said it was "deeply concerned" about the program after a closed-down discussion with Pentagon officials about a strategy to keep costs down and get development efforts back on track.
Air Force Secretary Michael Donley last month told Reuters he expected a shake-up of the F-35 program, including adjustments in schedule, but said there were no plans to reduce the total number of fighters to be purchased.
Lockheed Chief Executive Robert Stevens said his company agreed with the Pentagon that it should use some of its potential profit to get the program back on track.
Senior Lockheed officials were meeting this week with top Pentagon officials to hammer out a final plan for funding the program in fiscal 2011 and the coming years, Geisel said.
"Much of the information that's recently been reported is pre-decisional and we continue to work with the (Office of the Secretary of Defense) to come to resolution," he said.
He said the possible changes being discussed would not affect the U.S. government's plan to buy a total 2,443 F-35s for the three military services, or the dates that the services have set for starting to use the new fighter jets.
"The program is not in trouble. We are a little behind on delivery of the (system design and development) aircraft, about six months, but the rest of the aircraft will be delivered within the next four to six months."
Geisel also noted that the Pentagon was shifting to a more conservative approach when budgeting all weapons programs as a result of an acquisition reform law passed in 2009.
He also noted that Pentagon cost estimators had reduced their estimate of the extra money needed to complete the program's development by $1 billion, and now forecast a delay of just 13 months, about half that initially projected.
Bloomberg on Wednesday reported that Defense Secretary Robert Gates had directed the military in a Dec. 23 budget document to delay the F-35 program, cutting planned purchases by 10 aircraft in fiscal 2011 and a total of 122 through 2015.
Gates cut the purchase of F-35s by 10 planes in 2011 to 42; by 17 in 2012 to 45; by 52 in 2013 to 77; by 20 in 2014 to 90; and 23 in 2015 to 107, it said, citing the document.
Bloomberg said the Pentagon would use more than $2.8 billion that had been budgeted for buying airplanes over those years to continue its development instead.
The money would be used to complete scheduled flight testing more quickly and work on issues such as software, said a source familiar with the program who confirmed the Bloomberg report, but was not authorized to speak publicly.
He said the Pentagon could potentially add back in the production airplanes if Lockheed and the program were able to beat their cost and schedule targets.
Defense analyst Loren Thompson said the Pentagon was essentially putting money back into the development phase of the program that had been removed by the Bush administration, reducing the likelihood of more serious problems later on.
"This really is not bad news for the company. They are shifting money from production to do more test and reduce risk on the program," he said.
"But the government is building incentives into the development program so that some of the production planes taken out might be put back in of the program results are good."
No comment was immediately available from the Pentagon's F-35 office.

(Reporting by Andrea Shalal-Esa; editing by Carol Bishopric, Bernard Orr)