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Boeing (BA) Wins $3.4B Contract to Supply 17 P-8A Poseidon Jets
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The Boeing Company (BA - Free Report) recently secured a contract to start production of 17 P-8A Poseidon aircraft for the Royal Canadian Air Force and the German Navy. Boeing expects to deliver the first P-8A for Germany in 2025, while that for Canada is projected in 2026.
The contract is worth $3.4 billion. Per the terms of the deal, the Royal Canadian Air Force will receive 14 P-8A jets from Boeing, whereas the German Navy is set to receive three aircraft.
Successful deliveries of the aforementioned jets should bolster BA’s Boeing Defense, Space & Security (BDS) segment’s revenues in the future. The segment generated year-over-year revenue growth of 9% in the fourth quarter of 2023.
Significance of the P-8A Poseidon Aircraft
Boeing’s P-8 is a multi-mission maritime patrol aircraft, excelling at anti-submarine warfare, anti-surface warfare, intelligence, surveillance and reconnaissance and search and rescue.
The P-8 can fly higher and get to the fight faster. Its shorter transit time reduces the size of the area of probability when searching for submarines, surface vessels or search and rescue survivors. P-8 is also designed for low-altitude missions and has already proven its abilities to support humanitarian and search and rescue missions.
Due to such remarkable features, the company enjoys strong demand for the aircraft. Evidently, this jet’s demand can be gauged from the fact that there are 200 P-8 jets currently in service or on contract across nine countries including the United States, Australia, India, the United Kingdom, Norway, New Zealand, the Republic of Korea, Germany and Canada.
Growth Prospects
With nations worldwide consistently strengthening their defense structure, augmented spending on military aircraft can be witnessed. To this end, a report from the Mordor Intelligence firm projects the global military aviation market to witness a CAGR of 5.2% during 2024-2030.
In light of such growth prospects, Boeing, as a leading manufacturer of military aircraft, is likely to secure additional orders, like the latest one.
In particular, given the P-8A aircraft’s integration into the defense portfolios of numerous countries and the potential to join many others, Boeing has been making additional efforts to deliver better service for its P-8A customers in recent times.
Evidently, in 2023, Boeing joined forces with CAE to expand multi-mission platform collaboration in Canada, Germany and Norway. These agreements use the complementary capabilities of each company to provide superior management, technical and cost-effective training solutions for the P-8A Poseidon program. Further in Germany, Boeing has a partnership with ESG Elektroniksystem-und Logistik-GmbH and Lufthansa Technik to deliver systems integration, training, support and sustainment work that will bring the highest operational availability to achieve the German Navy’s mission.
Such notable efforts on Boeing’s part for further advancement and integration of its P-8A jets in other nations’ military missions must usher in more P-8A related contracts for this jet maker in the near future.
Opportunities for Peers
The global military aviation market’s growth prospects are also likely to benefit other defense companies that have a solid presence in the military aircraft space.
Lockheed Martin (LMT - Free Report) : It designs and integrates systems and manufactures the most agile and effective aircraft. Its product portfolio includes the Black Hawk, C-130J Super Hercules, F-16 Fighting Falcon, F-35 Lightning II fighter aircraft, etc.
Lockheed boasts a long-term earnings growth rate of 4.2%. The Zacks Consensus Estimate for 2024 sales indicates a growth rate of 2.4% from the prior-year reported figure.
Airbus Group (EADSY - Free Report) : Its military aircraft consist of the A400M, the C295 tactical transporter, the new-generation A330 Multi Role Tanker Transport and the Eurofighter, the most advanced swing-role fighter ever conceived.
Airbus’ long-term earnings growth rate is 12.4%. The Zacks Consensus Estimate for 2024 sales implies growth of 9.5% from the prior-year reported figure.
Textron (TXT - Free Report) : Its military aircraft includes the Beechcraft T-6 training aircraft and the Beechcraft AT-6 light-attack aircraft. The company also manufactures the Beechcraft Model 18 light bomber, the T-44 and T-34 training aircraft and the T-1A jet trainer.
Textron boasts a long-term earnings growth rate of 11.7%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 7% from the prior-year reported figure.
Price Performance
Shares of Boeing have lost 5.6% in the past year compared with the industry’s decline of 10.5%.
Image: Bigstock
Boeing (BA) Wins $3.4B Contract to Supply 17 P-8A Poseidon Jets
The Boeing Company (BA - Free Report) recently secured a contract to start production of 17 P-8A Poseidon aircraft for the Royal Canadian Air Force and the German Navy. Boeing expects to deliver the first P-8A for Germany in 2025, while that for Canada is projected in 2026.
The contract is worth $3.4 billion. Per the terms of the deal, the Royal Canadian Air Force will receive 14 P-8A jets from Boeing, whereas the German Navy is set to receive three aircraft.
Successful deliveries of the aforementioned jets should bolster BA’s Boeing Defense, Space & Security (BDS) segment’s revenues in the future. The segment generated year-over-year revenue growth of 9% in the fourth quarter of 2023.
Significance of the P-8A Poseidon Aircraft
Boeing’s P-8 is a multi-mission maritime patrol aircraft, excelling at anti-submarine warfare, anti-surface warfare, intelligence, surveillance and reconnaissance and search and rescue.
The P-8 can fly higher and get to the fight faster. Its shorter transit time reduces the size of the area of probability when searching for submarines, surface vessels or search and rescue survivors. P-8 is also designed for low-altitude missions and has already proven its abilities to support humanitarian and search and rescue missions.
Due to such remarkable features, the company enjoys strong demand for the aircraft. Evidently, this jet’s demand can be gauged from the fact that there are 200 P-8 jets currently in service or on contract across nine countries including the United States, Australia, India, the United Kingdom, Norway, New Zealand, the Republic of Korea, Germany and Canada.
Growth Prospects
With nations worldwide consistently strengthening their defense structure, augmented spending on military aircraft can be witnessed. To this end, a report from the Mordor Intelligence firm projects the global military aviation market to witness a CAGR of 5.2% during 2024-2030.
In light of such growth prospects, Boeing, as a leading manufacturer of military aircraft, is likely to secure additional orders, like the latest one.
In particular, given the P-8A aircraft’s integration into the defense portfolios of numerous countries and the potential to join many others, Boeing has been making additional efforts to deliver better service for its P-8A customers in recent times.
Evidently, in 2023, Boeing joined forces with CAE to expand multi-mission platform collaboration in Canada, Germany and Norway. These agreements use the complementary capabilities of each company to provide superior management, technical and cost-effective training solutions for the P-8A Poseidon program. Further in Germany, Boeing has a partnership with ESG Elektroniksystem-und Logistik-GmbH and Lufthansa Technik to deliver systems integration, training, support and sustainment work that will bring the highest operational availability to achieve the German Navy’s mission.
Such notable efforts on Boeing’s part for further advancement and integration of its P-8A jets in other nations’ military missions must usher in more P-8A related contracts for this jet maker in the near future.
Opportunities for Peers
The global military aviation market’s growth prospects are also likely to benefit other defense companies that have a solid presence in the military aircraft space.
Lockheed Martin (LMT - Free Report) : It designs and integrates systems and manufactures the most agile and effective aircraft. Its product portfolio includes the Black Hawk, C-130J Super Hercules, F-16 Fighting Falcon, F-35 Lightning II fighter aircraft, etc.
Lockheed boasts a long-term earnings growth rate of 4.2%. The Zacks Consensus Estimate for 2024 sales indicates a growth rate of 2.4% from the prior-year reported figure.
Airbus Group (EADSY - Free Report) : Its military aircraft consist of the A400M, the C295 tactical transporter, the new-generation A330 Multi Role Tanker Transport and the Eurofighter, the most advanced swing-role fighter ever conceived.
Airbus’ long-term earnings growth rate is 12.4%. The Zacks Consensus Estimate for 2024 sales implies growth of 9.5% from the prior-year reported figure.
Textron (TXT - Free Report) : Its military aircraft includes the Beechcraft T-6 training aircraft and the Beechcraft AT-6 light-attack aircraft. The company also manufactures the Beechcraft Model 18 light bomber, the T-44 and T-34 training aircraft and the T-1A jet trainer.
Textron boasts a long-term earnings growth rate of 11.7%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 7% from the prior-year reported figure.
Price Performance
Shares of Boeing have lost 5.6% in the past year compared with the industry’s decline of 10.5%.
Image Source: Zacks Investment Research
Zacks Rank
Boeing carries a Zacks Rank #4 (Sell) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.