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Boeing Wins 5-Year Order for Supplying F/A-18 Spare Parts

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Aircraft giant The Boeing Company (BA - Free Report) won a five-year basic ordering contract worth $41.5 million for supplying spare parts for F/A-18 E/F aircraft. Work pertaining to the deal will be carried out in Missouri.

The contract has been awarded by the Defense Logistics Agency Aviation, Philadelphia, PA. The company will utilize fiscal 2017 through 2021 Navy working capital funds to complete the task by Sep 30, 2021.

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. A single-seat variant of the Super Hornet, F/A 18E, is about 25% larger than its predecessor — the F/A-18C/D — but contains 42% lesser structural parts.

Our View

With the meteoric rise of the Islamic State of Iraq and Syria (ISIS) over the last few years and more developing nations increasing their share of defense spendings, the international market for defense equipment has been on an upward growth trajectory. This, in turn, has provided a solid impetus to sales in the Aerospace-Defense industry.

Being one of the major players in the defense business, Boeing’s key forte has been combat-proven aircraft. Also, it has started developing military aerial refueling and strategic transport aircraft of late. Banking on its proven expertise in aerospace programs, Boeing has been winning contracts from the Pentagon for long. Last quarter, the company’s military aircraft business contributed $2.9 billion to its total revenues. Thanks to the recently won contract, we expect the company to witness similar solid revenue growth in this business, in the coming quarters.

Moreover, last week’s Senate approval for the $700 billion National Defense Authorization Act indicates significant inflow of contracts for the front-row defense stocks in the United States. Therefore, the time is ripe for adding defense majors like Boeing, Lockheed Martin Corporation (LMT - Free Report) , Northrop Grumman Corporation (NOC - Free Report) and General Dynamics Corporation (GD - Free Report) , in your watchlist.

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