Boeing [NYSE: BA] today began final assembly of the first U.S. Navy P-8A Poseidon production aircraft in the company's Renton factory. The P-8A is the first of six low-rate initial production aircraft that Boeing is building as part of a $1.6 billion contract awarded by the Navy in January.

The Navy plans to purchase 117 of the Boeing 737-based P-8A anti-submarine warfare, anti-surface warfare, intelligence, surveillance and reconnaissance aircraft to replace its P-3 fleet.

"Boeing will deliver this first aircraft to the Navy on schedule in 2012 in preparation for initial operational capability, which is planned for 2013," said Chuck Dabundo, Boeing vice president and P-8 program manager. "Our team has built seven P-8A test aircraft to date and the process improvements and efficiencies we've incorporated will continue to help reduce costs as the program moves forward."

The Poseidon team is using a first-in-industry in-line production process that draws on Boeing's Next-Generation 737 production system. All aircraft modifications unique to the P-8A are made in sequence during fabrication and assembly.

The start of final assembly follows Spirit AeroSystems' delivery of the P-8A fuselage to Boeing. The fuselage arrived via rail car on March 7 and was loaded into a tooling fixture. Boeing workers have begun installing systems, wires and other small parts.

"We're excited to transition from the development airplanes to production," said John Pricco, Boeing Commercial Airplanes P-8 program manager. "Our team's tremendous work has put us in a good position as we ramp up to build both the P-8A for the United States and the P-8I for India."

Boeing was awarded a System Development and Demonstration contract in 2004 to build and test six flight-test and two ground-test P-8A aircraft. The first three flight-test planes -- T1, T2 and T3 -- are completing testing at Naval Air Station Patuxent River, Md. The program's static test plane, S1, completed its test program earlier this year.

A derivative of the Next-Generation 737-800, the Poseidon is built by a Boeing-led industry team that includes CFM International, Northrop Grumman, Raytheon, Spirit AeroSystems, BAE Systems and GE Aviation.