Updated from 2:57 p.m. EST

Shares of

Boeing

(BA) - Get Report

and

United Technologies

plunged on Monday on news the Army will cancel the Comanche attack helicopter program, costing the pair billions in potential revenue.

Acting Army Secretary Les Brownlee announced the military will shelve its plans to build the next-generation Comanche helicopter, a joint venture between Boeing and Sikorsky Aircraft, a unit of United Technologies. Brownlee said the military would shift $14.6 billion into other aircraft programs over the next seven years, upgrading the 1,400 helicopters currently in use and buying 800 additional aircraft, including a "significant" number of Black Hawk helicopters made by Sikorsky.

Reports of the cancellation knocked down shares of both companies ahead of the official announcement, with Boeing closing down 72 cents, or 1.6%, to $43.62, while United Technologies fell $2.82, or 2.9%, to $93.80.

With the Comanche project accounting for 30% of revenue at Sikorsky, the news was initially seen as worse for United Technologies. But the Comanche program accounts for less than 2% of United Technologies' total revenue and with the Army planning to spend more on Black Hawk helicopters, the news may not be as bad as investors initially thought.

"The recently released budget

from the Bush administration had $1.2 billion funding for the Comanche in fiscal 2004, implying a hit to ongoing earnings of 10 cents a share to United Technologies and a 5-cent

hit to Boeing," said Glenn Engel, analyst at Goldman Sachs, in a research note. "The decline in both Boeing and United Technologies stock prices resulting from today's surprise story seems to fully reflect the earnings impact."

While the end of the Comanche program comes as a surprise, given that Congress was not briefed before it was cancelled, its demise is part of the Pentagon's wider effort to cut costs. Even though the government had invested $8 billion in the Comanche program since it was launched in 1983, costs would have escalated once helicopters began rolling off assembly lines in 2007.

And while both Boeing and Sikorsky are expected to receive compensation for the early termination of the program, tens of billions of dollars have been left on the table. Estimates for the entire project run as high as $40 billion.

Last month, the White House Office of Management and Budget asked the Pentagon to study whether the Comanche, as well as the F/A-22 Raptor fighter jet from

Lockheed Martin

(LMT) - Get Report

, was worth the money. The program had come under fire from senior Pentagon officials, who feel that unmanned aircraft are capable of performing the reconnaissance missions that Comanches would have served.