Boeing Company (BA)

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Boeing Wins Deal to Supply Spare Parts for F/A-18 Aircraft
By: Zacks Equity Research | January 16, 2020

The Boeing Company (BA) recently clinched a contract for delivering spare items to support Flight Control Surfaces utilized on F/A-18 aircraft. The deal has been awarded by Defense Logistics Agency Aviation, Philadelphia, PA.

Valued at $14 million, the contract is expected to be completed by May 30, 2022. The agreement, to be executed in Missouri, will cater to Swiss Navy.

Rising Importance of Boeing’s F/A-18 Super Hornet

Boeing’s F/A-18 Super Hornet combat aircraft has emerged as the leading choice of weapon for militaries across the world. In fact, the Royal Australian Air Force and the Kuwait Air Force, apart from the U.S. Navy, operate these fighter aircraft in large numbers.

Furthermore, nations like Canada, Finland, Switzerland and Spain currently have Boeing’s Super Hornet in their arsenal.

What Favors Boeing?

Boeing, being one of the major players in the defense business, stands out among peers owing to its broadly diversified programs, strong order bookings and solid backlog. This enables the company’s defense segment to post solid top-line performance. Evidently, Boeing Defense, Space & Security (BDS) segment witnessed 2% year-over-year increase in third-quarter 2019 revenues to $7.04 billion.

Moreover, the U.S. government approved the fiscal 2020 defense budget earlier this year, per which the Department of Defense would receive $718 billion, reflecting a 4.9% increase from the prior-year budget. The budget includes a spending plan of $57.7 billion on aircraft, reflecting a massive surge of 166% from the approved fiscal 2019 defense spending on aircraft. This should usher in more contracts for Boeing’s BDS segment, going ahead.

Looking Ahead

Per a Frost and Sullivan, the global combat aircraft market is expected to witness CAGR of 0.3% to $47.2 billion by 2026 from 2017. Such growth can be attributed to rise in global threats, geopolitical instabilities and increased spending on defense. These projections should continue to boost demand for Boeing’s fighter jets and other combat aircraft programs.

Price Performance

Shares of the company have gained 5.2% in the past three months compared with the industry’s growth of 2.2%.



Zacks Rank & Stocks to Consider

Boeing currently carries a Zacks Rank #3 (Hold).

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