Boeing drops out of military transport plane program

Boeing Co. said it is pulling out of a proposed joint venture with Finmeccanica SpA's Alenia North America unit to build the C-27J cargo plane for the U.S. military.

"This is not about the C-27J aircraft or the team but based on the current global economic climate," Boeing said in a statement today.

The C-27J began as a joint venture in June 2007 between L-3 Communications Holdings Inc. and Finmeccanica's Alenia North America to replace the Army's and Air Force's fleet of older transport planes. Boeing later formed a partnership with Alenia to assemble the planes in the U.S.

"We were going to set up a production facility in Florida," Boeing spokesman Bill Barksdale said in an interview. "Looking at the objectives, based on analysis and in the current business conditions we couldn't satisfy our shareholders," he said of the company's decision to drop out.

Chicago-based Boeing, the world's second-biggest defense contractor as well as the No. 2 commercial-jet builder, is cutting 10,000 jobs, or about 6 percent of its workforce, as the global recession hurts airlines' profits and could divert U.S. military spending.

L-3 Communications has a contract with the Pentagon for $2 billion, according to its Web site. The U.S. military may order as many as 78 C-27J airplanes, the site said. The first two airplanes were delivered to the Army last year, spokeswoman Jennifer Barton said.