Spirit AeroSystems has commenced major assembly work on the first P-8A Poseidon maritime surveillance aircraft of the Royal Australian Air Force (RAAF).
Under the terms of the deal, which will see RAAF acquire eight P-8A aircraft, Spirit will be responsible for building 70% of the 737 military derivative aircraft using its existing next-generation 737 production system.
As part of the deal, 737-800 fuselages will receive military specific modifications before being sent to Boeing's final assembly facility in Renton, Washington, US.
At the facility, the entire structural features specific to the P-8A will be integrated into the aircraft during fabrication and assembly.
The first unit is scheduled to be delivered to Boeing in early 2016.
Spirit Boeing Defence & Regional Jet Programmes senior vice-president Duane Hawkins said: "Spirit is proud to be on the P-8A programme providing this important capability to the Royal Australian Air Force.
"Spirit has a unique capability to build military specific aircraft in the same 737 commercial production line that is producing 42 airplanes a month.
"We are able to use decades of experience building the 737 on military derivative programmes, which makes the P-8A more affordable and the highest quality possible."
The RAAF's P-8A will replace the AP-3C Orion aircraft, which have been in service for more than 40 years, as well as to monitor maritime approaches and patrol more than 2.5 million km² of marine jurisdiction.
RAAF air commodore Adam Brown said: "Our new P-8 will be the first of a new generation of maritime surveillance for Australia.
"We're particularly excited and proud to get what we think is the best maritime patrol aircraft in the world coming to service in our air force."
All the eight aircraft are scheduled to be fully operational by 2021, while the first aircraft is expected to be delivered to Australia in 2017.
An option for a further four aircraft has also been approved by the government subject to the results of the defence white paper review.