Mission Nearly Impossible

Sierra Nevada Corp.’s chairwoman and co-owner, Eren Ozmen, grins as she dances alone to the pop-funk beat blaring from the ballroom stage of the Sheraton Denver Downtown Hotel. Clapping her hands in front of a 19-foot LED screen to kick off Sierra Nevada’s annual “Leadership Forum,” Ozmen encourages the 300 or so employees in the audience to get up and move on this early April morning.
The song—“Happy,” by Pharrell Williams—matches her mood: Ozmen is almost certain that the aerospace-defense company she bought with her husband, Fatih, back in 1994 will win the U.S. Air Force’s prestigious contract to develop the next Doomsday planes. These are the hardened airborne command posts reserved for top military and political brass in case of nuclear war or other catastrophes, like an asteroid strike.
Sure enough, SNC lands the deal 22 days later, on April 26. Next year’s song? “I’m thinking ‘We Are the Champions,’ ” Ozmen says.
The contract is worth $13.1 billion over 12 years and is a game-changer for privately held SNC, which booked just $2 billion in revenue last year. For the longest time, the company, which is based outside Reno in Sparks, Nevada, has been firmly entrenched in the middle tier of the aerospace-defense industry, miles away from the industry’s five giants, including Lockheed Martin (revenue: $67.6 billion) and Northrop Grumman ($39.3 billion). Boeing, nearly 40 times as big as SNC at $77.8 billion in sales, was considered a shoo-in for the contract because it designed the four current E-4B—a.k.a. “Doomsday”—planes back in the 1970s. It has had contracts to maintain them ever since—worth some $150 million per year—and its four-engine 747-8 jumbo jets were considered the best models to accommodate the next generation. Whoever won the contract would be retrofitting up to eight used Boeing jets. SNC’s victory was a bit of a surprise. “You would have looked at this and said, ‘Well, yeah, that’ll go to Boeing,’ ” says American Enterprise Institute defense analyst Todd Harrison.
“Taking smart risks is very important,” says Ozmen, who transformed SNC into the country’s biggest female-owned defense contractor by doing just that. “That is a big part of being an entrepreneur. Without that, really, you’re just following what’s happening—you’re not leading.”
The Survivable Airborne Operations Center contract, as the Doomsday project is called, is a mountain of technical and management challenges. To grab it from Boeing, the Ozmens had to agree to do a minority of the project at a fixed price, bearing cost overruns themselves. That could prove difficult for the ambitious company. After all, the same sort of provision created a $2 billion (and growing) hole in Boeing’s balance sheet for the much-delayed next generation of Air Force One presidential planes. One positive: Unlike that contract, SNC’s fixed pricing structure will be limited to the production phase, meaning it likely won’t have to eat unexpected costs during the more uncertain design stage.
“The incumbent”—read: Boeing, the only other company to bid on the project—“was not so interested in applying innovation, reducing costs or reducing schedule,” Ozmen says. “We are becoming known as a disruptive innovator. I think that got us the contract.”
SNC benefited from a bit of lucky timing, too. In addition to its well-publicized problems with its commercial 737s, Boeing is saddled with a swarm of defense contracts that have turned into money pits. In short, the Arlington, Virginia–headquartered giant wasn’t in any mood to bid aggressively, and it got eliminated last fall after submitting an offer that ignored the Air Force’s tough terms, including giving up valuable intellectual property rights.
“If you lose a contract that you were going to lose money on, you actually win,” says Nicolas Owens, a Morningstar aerospace analyst, discussing Boeing’s move. “If I get really good at making four Doomsday planes for the Air Force, what does that qualify me to do? Maybe make four more, but that’s it. No one else is buying these things. It’s not like Jeff Bezos gets one too—I promise.”
But the Doomsday project will elevate the profile and help define the legacy of Ozmen and her husband, both 66, who own 87% of SNC (Eren has a slightly higher stake) and are worth a combined $7.8 billion. At best, it could jump-start a climb toward the aerospace major leagues. At worst, it could end up as a costly catastrophe that sets their growth plans back years.
Just before the pandemic, Fatih, who as CEO focuses on strategy and growth (Eren, who is also president, oversees governance and finances), decided it was time to compete for programs that typically go to “tier one” aerospace-defense companies. “I challenged my executive leadership to think about how we could double the size of SNC in five years,” Fatih says. The team set their sights on the Doomsday contract. The Ozmens began chatting with the Air Force about the project in early 2020, then started investing money. Lots of it. They spent $175 million (and counting) to modernize SNC’s digital infrastructure, with a focus on AI and digital modeling. Then, before they won the contract, they spent over $100 million building a 747-sized hangar near an Air Force base in Dayton, Ohio. It’s nice not to have to answer to public shareholders.
The Ozmens are no strangers to tricky aircraft modification. The couple, now U.S. citizens, were born in Turkey, met in Ankara and were graduate students together at the University of Nevada at Reno. Eren paid tuition in part by cleaning offi­ces at SNC, at the time a small defense outfit with fewer than 20 employees. She and Fatih took jobs there as a financial reporting manager and engineering intern, respectively, in the 1980s. After watching the company barely survive a series of financial crises, they decided to borrow against their home and purchase the business for less than $5 million in 1994.
SNC specializes in integrating existing aircraft with new technologies but is better known for its space affiliate, Sierra Spa...