F-15 Sales to Saudis May Aid McDonnell Douglas

A U.S. sale of the advanced version of F-15 fighter planes to Saudi Arabia would provide at least a modest boost to some defense contractors, particularly ailing St. Louis-based McDonnell Douglas, which has said it will eliminate 17,000 jobs this year.

Defense Secretary Dick Cheney is expected to work out details of the sale, involving 24 F-15 Eagles, during his current visit to Saudi Arabia.

The Pentagon would most likely make the sale from its current stockpile, but McDonnell Douglas would have the opportunity to win an extended contract to provide replacement aircraft, said Michael Beltramo, a defense-industry management consultant in Los Angeles.

An advantage of an extended contract, he said, is that the F-15 “is the most mature” aircraft. Unlike some newer, riskier programs, the manufacturer understands better “what the costs and risks are” in producing the aircraft. McDonnell Douglas’ experience means that “each aircraft (under an extended contract) will add a profit to their bottom line,” he added.

McDonnell Douglas spokesman Jim Reed declined to speculate on what effect a sale to the Saudis would have on the company. Any increased production of the fighter--which is manufactured at the company’s St. Louis facilities--would not affect layoffs announced this year, he said. The company announced the job cuts--including 9,000 in Southern California--as part of a plan to cut costs by $700 million to improve its profitability.

Reed said the federal government has funded the F-15 program through the fiscal 1991 year. McDonnell Douglas is slated to produce about 24 fighters this year under its contract, he said. He declined to say what F-15’s cost is, but some analysts said the government’s cost may be as high as $50 million for each fighter, including the total equipment that must be added.

The Pentagon has a current inventory of 800 to 850 fighters, Beltramo said.

The F-15 Eagle is the most sophisticated version of the fighter plane. That version has never been sold to the Saudis although they have purchased the F-15C and the F-15D. The Reagan Administration considered selling the advanced F-15 to the Saudis about five years ago, but abandoned it because of an expected bitter fight with a Congress concerned that the sale would endanger Israel.

Times staff writer Dean Takahashi contributed to this article.