Aerospace giant, The Boeing Co. (BA - Free Report) , has secured a modification contract to provide additional funding for the Service Life Assessment Program (SLAP) and Service Life Extension Program (SLEP), Phase C for the F/A-18E/F aircraft.
Notably, the SLAP and SLEP programs aid the extension of the service life of the F/A-18E/F jets beyond the original design of the 6,000 flight hours.
Details of the Deal
Valued at $42 million, the contract has been awarded by the Naval Air Systems Command, Patuxent River, MD.
Work related to this deal is scheduled to be over by Jul 30, 2021 and will be carried out in St. Louis, MS and El Segundo, CA.
A Brief Note on F/A-18
Boeing’s F/A-18 Super Hornet — a twin-engine, supersonic, all weather multirole fighter jet — is the U.S. Navy’s primary strike and air superiority aircraft. It is capable of landing and taking off from an aircraft carrier. F/A 18E is a single-seat variant of the Super Hornet, which is about 25% larger than its predecessor, the F/A-18C/D, but comparatively contains 42% lesser structural parts.
Boeing is one of the major players in the defense business. In particular, among other defense equipments, the company's key forte has been combat-proven aircraft. Additionally, with its proven expertise in aerospace programs, it has been clinching a huge number of contracts from the Pentagon for long.
Evidently, Boeing won the Aerospace Systems Air Platform Technology Research program contract from the U.S. Air Force last week. The deal came up with a ceiling value of $499 million. Per the contract, the company will be responsible for providing quality research for affordable, revolutionary capabilities for the warfighter. Again, last month, the company clinched a contract worth $323.5 million, to supply spare parts of F/A-18 A-F and F/A-18 aircraft from the Defense Logistics Agency Aviation. In this regard, we expect the recently won contract to add further impetus to the company’s growth trajectory.
Moreover, the current budget scenario is favorable to the defense industry, which also buoys investors’ optimism. To this end, the U.S. House of Representatives passed the 2018 defense policy bill this July, reflecting an expenditure level of $696 billion. The figure exceeded President Trump’s fiscal 2018 defense budget request proposed in March.
If enacted, this budgetary amendment is expected to immensely boost Boeing and other defense major’s business in the near term.
Shares of Boeing have surged 86.8% in the last 12 months, outperforming the industry’s gain of 41.6%. 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. In addition, the company poses strong competition to its peers like Lockheed Martin Corp. (LMT - Free Report) , General Dynamics Corporation (GD - Free Report) and Huntington Ingalls Industries, Inc. (HII - Free Report) .
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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