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Posted: 5/23/2005 4:15:35 PM EST
[Last Edit: 5/23/2005 4:47:48 PM EST by COLE-CARBINE]
(sadly the info is from CNN).

Defense Budget Bills Add Money For New Transport Planes
May 19, 2005: 17:09 p.m. EST

WASHINGTON (Dow Jones)--A one-two punch of budget politics and combat needs has added money for new military transport planes to Senate and House of Representatives budget legislation.

Defense bills from the two armed services committees include funding for both the C-130J, made by Lockheed Martin Corp. (LMT), and the C-17, made by Boeing Co. (BA). The Senate passed its bill last week, followed by an alternate $442 billion House proposal passed early Thursday morning.

The House bill would be particularly good for Boeing because it includes a measure laying groundwork for 42 additional jets, on top of the currently planned 180-plane fleet. The Bush administration's budget requested only enough money for seven, which the Pentagon said also could be used to help shut down the line if purchases ended in 2008, after current orders are filled.

Teal Group aerospace analyst Richard Aboulafia said the budget request was practically asking for an "unrequested" increase for airlift programs.

"Lift is politically popular, economically important and strategically necessary, the perfect place DOD would make cuts and expect plus-up," Aboulafia said.

For the C-130J, the budget bills represent the final act of a political drama that has been playing out since December. Late last year, Pentagon planners recommended breaking Lockheed Martin's long-term contract and ending C-130J purchases in 2006, two years early.

But the budget decision apparently didn't reflect either Air Force needs or shutdown costs, variously estimated at $500 million to $1 billion or more. The move also drew heavy criticism from Sen. Saxby Chambliss, R-Ga., and other lawmakers whose constituents would lose jobs if the line shut down.

Defense Secretary Donald Rumsfeld wrote Congress last week asking that the C- 130J be restored to previous plans. As a result, both committees authorized funding for nine Air Force planes and four Marine Corps tanker variants.

Aboulafia said the Pentagon might never have seriously wanted to end C-130J purchases. Instead, the cuts could have been an effort to portray the Defense Department as serious about saving money despite a 2006 defense budget now expected to top $440 billion.

"It was hard to tell how sincere they were from the start," he said.

Lockheed Martin applauded congressional action to keep the C-130J program fully funded.

"We're very pleased that, during the budget process, the decision was made to keep the C-130J multiyear procurement contract in place. We look forward to providing the customer with a quality aircraft that's proved itself in two combat theaters," Lockheed Martin spokesman Jeff Adams said Thursday.

Boeing also welcomed the budget action so far on air mobility. In addition to laying groundwork for future C-17 purchases, the budget legislation also includes about $2.8 billion for a planned 2006 purchase of 15 planes.

"We look forward to continuing dialogue with the Pentagon and the Congress as the House and Senate move towards conference. We are pleased that both committees strongly endorse the need for future procurement of the C-17," Boeing spokesman Doug Kennett said.

-By Rebecca Christie, Dow Jones Newswires; 202 862 9243; rebecca.christie@ dowjones.com

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