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Boeing Wins $62M Navy Deal to Support P-8A Poseidon Program

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The Boeing Company (BA - Free Report) recently secured a modification contract to offer engine depot-level maintenance and repair support for P-8A Poseidon jets. The deal will cater to the U.S. Navy, the government of Australia and the Foreign Military Sales customers.

Valued at $61.6 million, the contract was awarded by the Naval Air Systems Command, Patuxent River, MD and is expected to be completed by October 2021. Majority of the work pertaining to this deal will be carried out in Atlanta, GA.

Importance of P-8A Poseidon

The P-8A Poseidon is militarized with maritime weapons, which patrol the globe, performing anti-submarine and anti-surface warfare, intelligence, surveillance and reconnaissance, and search and rescue missions. Seven nations across the globe now selected the P-8A as their future maritime patrol aircraft including South Korea and New Zealand. Earlier this February, Britain’s Royal Air Force (RAF) also received its first P-8A aircraft, which will be instrumental in monitoring Russian submarine activities.

What’s Favoring Boeing?

Of the varied defense equipment that Boeing manufactures, the company’s forte lies in the development of combat-proven aircraft, such as the P-8A Poseidon. Additionally, Boeing started developing military aerial refueling and strategic transport aircraft for its fixed-wing military aircraft programs. Such notable developments are anticipated to fuel this aerospace giant’s growth, considering the increasing defense spending provisions made by the current U.S. administration.

Further, the U.S. fiscal 2021 defense budget allocation includes massive war-fighting investments worth $56.9 billion for military aircraft. Such defense spending isexpected to boost order growth for major combat jets like P-8A Poseidon as is evident from the latest contract win, which in turn, is likely to boost the company’s profit margins in the days to come.

Per a Mordor Intelligence report, the global maritime patrol aircraft market is anticipated to witness a CAGR of more than 3% during the 2020-2025 period. The heightening threat of global terrorism and geo-political issues alongside the need for replacing ageing maritime patrol aircraft with a new and advanced fleet will likely spur demand for maritime patrol aircraft during the forecast period. Notably, other major industry players, which can significantly gain from surging maritime aircraft demand include Lockheed Martin Corporation (LMT - Free Report) , Textron Inc. (TXT - Free Report) and Airbus Group (EADSY - Free Report) .

Zacks Rank and Price Movement

In a year’s time, shares of this Zacks Rank #3 (Hold) company have slumped 55.5% compared with the industry’s 33.2% decline. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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