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Boeing, UTX to Form Logistics Entity

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The Boeing Company (BA - Free Report) collaborated with United Technologies Corp’s (UTX - Free Report) business division Sikorsky Aerospace Services to compete for logistics service contracts to support Saudi Arabia’s rotorcraft fleet.

The new joint initiative named Boeing Sikorsky International Services ("BSIS") will operate as a single-source provider of sustainment services to Saudi Arabia’s rotorcraft fleet. This includes wide-ranging in-country logistics, fleet and supply-chain management, maintenance support, aircraft modifications and training for aircrews as well as maintainers.

The future contracts that will be received by BSIS will be administered by the U.S. government and will be a part of the Foreign Military Sales process. Boeing and United Technologies will be equal partners in BSIS.

The Arab kingdom currently operates a fleet of Boeing fixed wing and rotorcraft platforms. Saudi Arabia’s defense expenditure is expected to climb gradually to 8.6% of its Gross Domestic Product in 2017 from 7.8% in 2012 owing to increasing security issues in the Middle East. Boeing’s strategic partnership thus looks well-timed and capable of yielding future profits.  

Earlier this month Boeing and the U.S Army inked a $4 billion multi-year agreement to supply 177 CH-47F Chinook helicopters with the option to increase the total purchase to 215. Meanwhile, the company has clinched lofty commercial jet orders at the ongoing Paris Air Show which will help Boeing to retain a stable growth momentum amidst the defense budget cutbacks in the U.S.

Boeing currently carries a Zacks Rank #3 (Hold). Other defense counterparts with a favorable Zacks Rank #2 (Buy) are Raytheon Company (RTN - Free Report) and Wesco Aircraft Holdings Inc. (WAIR - Free Report) .

Based in Chicago, Boeing Company together with its subsidiaries engages in the design, development, manufacture, sale, and support of aerospace and defense products as well commercial jetliners.

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