Bell-Boeing, the strategic joint venture (JV) between aircraft major The Boeing Company (BA - Free Report) and diversified U.S. conglomerate Textron Inc.’s (TXT - Free Report) – wholly owned subsidiary Bell Helicopter – recently secured a modification contract worth $267.3 million. Work related to this deal is scheduled to be over by Nov 2018.
Details of the deal
Per the terms of the deal, the JV will offer additional joint performance-based logistic support to the Marine Corps MV-22 and the Air Force and Special Operations Command CV-22 jets. The contract will utilize fiscal 2017 operations and maintenance funds of the U.S. Navy, Special Operations Command and Air Force as well as fiscal 2017 aircraft procurement funds of the U.S. Navy.
The contract was awarded by the Naval Air Systems Command, Patuxent River, MD. Majority of the work will be carried out in Fort Worth, TX, Ridley Park, PA and other locations across the U.S. as well as outside the continental U.S.
A Brief Note on V-22 Jets
Formed in 1981, Bell-Boeing JV’s primary product is V-22 Osprey – a joint service multirole combat aircraft that utilizes tiltrotor technology to combine the vertical performance of a helicopter with the speed and range of a fixed-wing aircraft. Notably, this aircraft can take off, land and hover like a helicopter; while once airborne it can convert into a turboprop airplane capable of high-speed, high-altitude flight.
CV-22 and MV-22 are two variants of the V-22 jets. The CV-22 models are primarily used by the U.S. Air Force and Special Operations Command for conducting long-range infiltration, exfiltration and resupply missions. On the other hand, the MV-22 variant is the primary assault support aircraft for the U.S. Marine Corps and facilitates in raid operations, cargo lifting and special warfare.
The rapid rise in terror attacks has compelled the U.S. government to expand its defense budget substantially in recent times, a result of which is modernization of tactical equipment and modification of the existing ones. Further, the widespread rise of ISIS has added to this nation’s fears as it has been at the top of the organization’s target list.
Naturally, Pentagon has been allocating substantial funds to the defense contractors for enhanced security of the country. With no improvement expected in the geopolitical situation at present, defense majors like Boeing and Textron, to name a few, are poised to gain substantially.
Zacks Rank & Key Picks
Both Boeing and Textron currently carry a Zacks Rank #3 (Hold). Better-ranked stocks in the aerospace and defense sector include Engility Holdings, Inc. (EGL - Free Report) and Northrop Grumman Corporation (NOC - Free Report) .
Engility Holdings, sporting a Zacks Rank #1 (Strong Buy), witnessed a 12.13% gain year to date. On an average, the company posted a positive earnings surprise of 23.19% in the trailing four quarters.
Northrop Grumman, also carrying a Zacks Rank #1, witnessed a 31.4% gain year to date. On an average, the company posted a positive earnings surprise of 8.29% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
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