By Sharon Terlep

Boeing scored a contract to build the Pentagon's next-generation jet fighter, beating out rival Lockheed Martin. The deal has big implications for Boeing's bottom line, its beleaguered defense unit and the jet maker's strained relationship with the Trump administration.

What is the project?

The Pentagon wants the new jet fighter to replace the stealthy F-22, a Lockheed aircraft, and fly alongside semiautonomous drones that are already well into development.

The Trump administration has vowed to strengthen U.S. defense even as it pushes to shrink the federal government. It also wants to let in new entrants and give priority to software, drones and robots, potentially at the expense of traditional defense contractors like Boeing and Lockheed.

What does this mean for Boeing?

The deal is a boost for Boeing's defense business, which represents around one-third of the company's revenues but has lost billions of dollars over the past several years, when Boeing has said it was locked into money-losing defense contracts. Many of Boeing's defense and space contracts have had cost overruns, delays and other snafus. Boeing also has been beaten out by rivals in several high-profile competitions for U.S. government programs. Chief Executive Kelly Ortberg, who took over in November, has vowed to overhaul Boeing's process of bidding for government contracts in an effort to reverse losses. Boeing invested heavily in the next-generation fighter contest.

What does the deal say about Boeing's relationship with the Trump administration?

The jet fighter contract represents a vote of confidence by the administration in a company that has been crippled by a string of crises. President Trump and Elon Musk have publicly criticized Boeing for delays on an Air Force One replacement and past cost overruns on military projects. Meanwhile, Boeing is negotiating with the Justice Department over a plea deal related to two deadly 737 MAX crashes, and needs approval from the Federal Aviation Administration to ramp up production of its bestselling 737s, a step the company needs to make to become profitable.

What does it mean for Lockheed?

The deal is another blow for Lockheed Martin, whose shares have fallen over the past six months. The Boeing rival has been seeking new contracts to lessen its dependency on its F-35 fighter program, which has been plagued with delays, cost overruns and design and software challenges.

Write to Sharon Terlep at sharon.terlep@wsj.com

(END) Dow Jones Newswires

March 21, 2025 12:00 ET (16:00 GMT)

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