Boeing (NYSE:BA) recently won an order for delivering retrofit documentation and kits to convert nine F/A-18E and two F/A-18F aircraft into a Blue Angel configuration. Valued at $17 million, the contract was awarded by the Naval Air Systems Command, Patuxent River, Maryland, and has since placed BA stock in the spotlight.
The work will be carried out in St. Louis and is expected to be completed in Dec. 2021. Fiscal 2018 aircraft procurement (Navy) funds will be used to finance the task.
Growing Demand of F/A-18
Boeing’s Super Hornet aircraft is continuously evolving to outpace future threats. Its radar, mission computers and sensors continue to evolve in order to meet extensive mission profiles. Due to the ever rising worldwide demand of military aircraft, BA has also developed the Advanced Block III Super Hornet to complement existing and future air-wing capabilities, which includes battle-space situational awareness, counter stealth targeting, increased acceleration and improved survivability.
Such major developments have enabled Boeing to witness solid demand for its fighter aircraft and major aerospace programs, including the F-18 aircraft. This is evident from the contract that it secured from Kuwait in first-quarter 2018 for delivering 28 F-18 Super Hornets. We believe that this latest contract will also help in substantiating BA jet fighters’ strong position in the global market.
Our View on BA Stock
As Boeing’s key forte lies in manufacturing combat-proven aircraft, it has inevitably secured a large number of contracts from the Pentagon for long owing to its proven expertise in aerospace programs. Subsequently, revenues at its Defense, Space & Security (BDS) segment witnessed a 9% rise year-over-year to $5.59 billion in second-quarter 2018.
Further, BA’s recently completed the KLX Inc (NASDAQ:KLXI) acquisition will enable the aircraft major to enhance its global parts distribution and supply chain services and accelerate Global Service’s growth strategies. Moreover, this deal will position the company in effectively serving customers in a $2.6- trillion, 10-year services market.
Meanwhile, the fiscal 2019 defense budget recently approved by the U.S. Senate, provisions major war-fighting investments for up to $21.7 billion worth of aircraft. This should not only boost BA’s profit margin but also benefit military jet makers like Lockheed Martin (NYSE:LMT), General Dynamics (NYSE:GD) and Northrop Grumman (NYSE:NOC).
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