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Boeing (BA) Wins $600M Air Force Contract for PAR Program

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The Boeing Co. (BA - Free Report) has won a modification contract, worth $600 million, to provide new preliminary design activity requirements for the Presidential Aircraft Recapitalization (PAR) program. The contract was awarded by the Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, OH.

Details of the Contract

This modification will supplement work that is already taking place under the PAR contract, which includes risk reduction activities and the acquisition of two commercial Boeing 747-8 aircraft.

Per the contract, Boeing will complete preliminary design work for the modification of two 747-8 aircraft to replace the two aging VC-25A and Boeing 747-200, used as presidential support aircraft.

The resulting modification to the aircraft, which is expected to be negotiated in a future contract modification, will include incorporating a mission communications system, electrical power upgrades, a medical facility, an executive interior, a self-defense system, and autonomous ground operations capabilities.

Work is scheduled to be completed by Dec 31, 2018 and will be executed in Seattle, WA. The contract will use fiscal 2017 research and development funds to complete the task.
 
Future Plans

Further modifications are expected to be made in the contract, going forward. This will be done to include the purchase of the commercial 747-8 aircraft, in addition to designing, modifying and testing them to meet the standards for the presidential mission.

Once the results of the risk reduction activities have been identified, the Air Force will offer the majority of the program on a separate contract.

The PAR Program

On Jan 28, 2015, Secretary of the U.S. Air Force, Deborah Lee James, in coordination with Frank Kendall, Undersecretary of Defense for Acquisition, Technology and Logistics, revealed that Boeing’s 747-8 has been selected as the next presidential aircraft, commonly known as Air Force One. It was approved on Sep 4, 2015.

The PAR program will replace the existing Air Force One, VC-25A, through an extremely customized acquisition program by 2024.

Price Movement

Shares of Boeing have surged 95.4% over the last 12 months, outperforming the broader industry’s gain of 42.6%. This might have been driven by the company’s strong balance sheet and cash flows that provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions. Also, the company poses strong competition to its peers like Lockheed Martin Corporation (LMT - Free Report) , General Dynamics Corporation (GD - Free Report) and Huntington Ingalls Industries, Inc. (HII - Free Report) .



Zacks Rank

Boeing currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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