Pity Boeing's (NYSE: BA) shareholders. It's starting to look like they bought stock in the gang that couldn't shoot straight.
As a founding member of the nine-nation international coalition that helped Lockheed Martin (NYSE: LMT) design its F-35 stealth fighter, Canada was logically expected to buy this fighter from Lockheed Martin to replace its aging fleet of 60 Boeing-built CF-18 Canadian-variant F/A-18A fighters. At least, that was the plan up until last year. Then, price worries caused Canada to give Boeing a second look, and consider buying at least a handful of new F/A-18s instead while it mulled new plans for a larger acquisition.
Then came the trade war. Irked at Canadian planemaker Bombardier (NASDAQOTH: BDRBF) making inroads in the United States by selling small commercial airliners at as much as 70%-off list price, Boeing petitioned the U.S. International Trade Commission to levy import tariffs on the Canadian company. Canada didn't like this idea one bit, and announced last week that in response, it is canceling its planned purchase of 18 new Boeing F/A-18s (a purchase that might have netted Boeing as much as $1.4 billion in revenue).
And that's where things got really weird.
Canada has a plan for having getting itself some F-18s on the cheap -- and Boeing might not like it. Image source: Getty Images.
Buying Boeings, but not from Boeing
You see, Canada still likes the cheaper price tag on Boeing's fighters -- it just doesn't want to give Boeing any money, now that Boeing's is suing Canada's favorite aerospace stock. So instead of buying F/A-18s directly from Boeing, Canada's Public Services and Procurement agency made the following cryptic announcement on Tuesday:
Acquiring the aircraft that Canada's military needs ... is a top priority for the Government of Canada. The government is delivering on its promise to hold an open and transparent competition to permanently replace Canada's fighter fleet [with] 88 advanced fighter aircraft [at a later date. Meanwhile,] until permanent replacement aircraft are in place and fully operational ... the Government of Canada will pursue the purchase of 18 supplemental jets from the Australian Government.
Notice how Canada didn't say what kind of "supplemental jets" it will be buying from Australia? Funny story. AP is now reporting that Canada plans to buy Boeing F/A-18s -- but not from Boeing, but from Australia instead.
Granted, these will be used planes, but for this reason, they'll be much cheaper than the new F/A-18s Boeing was offering to sell Canada. The additional savings might even help Canada to bridge its budget gap and, when it comes time to buy its additional "88 advanced fighter aircraft," to be able to afford fifth-generation Lockheed Martin F-35s instead of fourth-generation Boeing F/A-18s.