The Boeing Company ( BA Quick Quote BA - Free Report) recently secured a modification contract to offer engine depot-level maintenance and repair support for P-8A Poseidon jets. The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD. Details of the Deal
Valued at $131.7 million, the contract is projected to get completed in October 2022. The majority of the work related to the deal will be executed in Atlanta, GA.
The contract will serve the U.S. Navy, the government of Australia, and Foreign Military Sales customers.
Importance of P-8A Poseidon
The P-8A Poseidon, a multi-mission maritime patrol aircraft, can perform anti-submarine and anti-surface warfare, intelligence, surveillance and reconnaissance, and search and rescue missions. Seven nations across the globe have selected the P-8A as their future maritime patrol aircraft including South Korea and New Zealand. In February 2020, Britain’s Royal Air Force (RAF) received its first P-8A aircraft, whereas in March 2021, Boeing won a $1.6 billion contract for the production and delivery of 11 P-8A jets to the U.S. Navy and the government of Australia.
Last month, the company won another contract worth $757 million for the production and delivery of 12 P-8A jets to Germany. Such frequent contract inflows, including the latest one, indicate the global demand that this jet model enjoys.
What’s Favoring Boeing?
Of the varied defense equipment that Boeing manufactures, the company’s strength 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.
Being the United States’ largest jet maker, Boeing enjoys a smooth flow of contracts for military jets and its associated upgrades. The latest contract win is an example of the same.
Per a Mordor Intelligence report, the global maritime patrol aircraft market is anticipated to witness a CAGR of 6.4% during the 2021-2026 period. The heightening threat of global terrorism and geo-political issues alongside the need to replace aging maritime patrol aircraft with a new and advanced fleet will likely spur demand for maritime patrol aircraft during the forecast period, thereby boosting growth of the market.
Notably, major industry players poised to gain from surging maritime aircraft demand include Boeing,
Lockheed Martin ( LMT Quick Quote LMT - Free Report) , Textron ( TXT Quick Quote TXT - Free Report) and Northrop Grumman ( NOC Quick Quote NOC - Free Report) .
Notably, Lockheed’s maritime patrol aircraft, P-3 Orion performs air, surface, and subsurface patrol, and reconnaissance tasks over extended periods and far from support facilities.
Textron’s King Air 260 jets provide the right balance of durability and operating economics for maritime patrol missions.
Northrop Grumman’s MQ-4C Triton unmanned aircraft system provides real-time intelligence, surveillance and reconnaissance over vast ocean and coastal regions.
In a year’s time, shares of Boeing have surged 29.9% against the
industry's 8.7% decline. Image Source: Zacks Investment Research Zacks Rank
Boeing currently carries a Zacks Rank #3 (Hold). You can see
. the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here