Northrop Grumman said Wednesday it was dropping out of the U.S. Air Force's T-X trainer jet contest with partner BAE Systems, making it the second team to leave the competition in the past week.
The T-X, a contract valued at more than $16 billion, would replace the aging T-38 Talon pilot training aircraft manufactured by Northrop in the 1960s.
Last week, Raytheon exited the competition after failing to reach terms with Italian defense company Leonardo S.p.a.
"The companies have decided not to submit a proposal for the T-X Trainer program, as it would not be in the best interest of the companies and their shareholders," Northrop said in a statement.
Northrop said it and BAE still "remain fully committed to performing on current and future U.S. Air Force programs, to deliver critical capabilities to America's airmen."
International teams from Sweden's Saab and Boeing as well as Lockheed Martin and Korean Aerospace remain in the competition for the Air Force's next-generation trainer. The contract is seen as a must-win for Boeing's tactical aircraft business since the government last year rejected the company's protest of Northrop winning the long-range strike bomber.
Also, Sierra Nevada is teamed with Turkish Aerospace Industries and there's been talk Textron could propose its Scorpion jet as a trainer.
A Textron spokesperson said Wednesday the company is "still evaluating the requirements" of the training program and does not have a decision to share at this time.
The Air Force issued a final request for proposals for the T-X jet trainer program last month. The program involves the purchase of 350 aircraft with operational capability of the trainer by the end of the government's fiscal 2024.
Northrop management had previously pointed out the costs of the T-X competition would vary between companies since there would be both a clean-sheet design in the contest as well as vendors with derivative airplanes. Northrop and Boeing designs fall in the clean-sheet category.
Last week, Northrop CEO Wes Bush hinted the company had not made a final decision on whether to submit a bid for the T-X contract. "We're presently assessing the terms presented by that RFP to determine whether we see an appropriate business opportunity for us to submit a bid," he said.
(CORRECTION: An earlier version of this story misstated the names of the international teams competing for the Air Force's next generation trainer. The teams are Sweden's Saab and Boeing as well as Lockheed Martin and Korean Aerospace.)