The Boeing Company BA recently won a modification contract involving the production of KC-46 aircraft. The deal was awarded by the Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, OH.
Valued at $1.69 billion, the contract is scheduled to be completed by Apr 30, 2023. Through the latest contract modification, Boeing will offer 12 KC-46 aircraft, data, subscriptions and licenses, and G081 flat file in addition to those being produced under the basic contract.
Work related to the deal will be executed in Seattle, WA.
Significance of KC-46
The KC-46 Pegasus is a wide-body, multirole tanker that can refuel all U.S., allied and coalition military aircraft compatible with international aerial refueling procedures. Boeing had initially designed KC-46 to carry passengers, cargo and patients. The aircraft is also equipped to detect, avoid, defeat and survive threats using multiple layers of protection, which will enable it to operate safely in medium-threat environments.
Rising Demand for Combat Jets Aids Boeing
With growing security threats across the globe, emerging economies like the Asia Pacific, the Middle East and South America are spending a lot on enhancing their defense arsenals. Meanwhile, developed nations like the United States and Europe have already been leading the defense market for some time now.
It is imperative to mention in this context that military aircraft, both manned and unmanned, form an integral constituent of a country’s defense products. Notably, emerging trends in the combat aircraft space like the fifth-generation technology aircraft, advanced composite materials, stealth technology and refueling jets like KC-46 have been driving demand substantially.
Being the United States’ largest jet maker, Boeing enjoys a smooth flow of contracts for military jets and its associated upgrades. The latest contract win is an example of the same.
Per a Morder Intelligence report, the global combat aircraft market is expected to witness a CAGR of 4% during the 2020-2025 time period. Such growth can be attributed to increasing global threats, geopolitical instabilities and higher spending on defense. These projections should benefit combat jet manufacturers like Boeing, Northrop Grumman NOC, Lockheed Martin LMT and Airbus EADSY.
In a year’s time, shares of Boeing have plunged 36.8% compared with the industry’s decline of 24.2%.
Boeing currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
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Airbus Group (EADSY) : Free Stock Analysis Report
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