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Boeing (BA) Wins $59M Air Force Contract for KC-46 Support

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The Boeing Co. BA has won a modification contract from the U.S. Air Force (USAF) to exercise an option for interim contracting support for the KC-46.

Contract Details

The contract is valued at $59.2 million. It was awarded by the Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, OH.

Work is scheduled to be completed by Mar 24, 2018 and will be executed worldwide. The contract will use fiscal 2016 aircraft procurement funds.

A Brief Note on KC-46

Manufactured on the air frame of Boeing’s 767 commercial jet, KC-46 is the first new U.S. air refuelling tanker since the 1980s. In the words of Leanne Caret, Boeing’s Defense, Space & Security president and CEO, “The KC-46 tanker will provide the Air Force unprecedented refueling capabilities, operational flexibility and combat readiness.”

The wide-bodied KC-46 Pegasus is a multirole tanker that can refuel all U.S., allied and coalition military aircraft compatible with international aerial refueling procedures, according to the company.

About Boeing

Boeing witnesses a steady flow of contracts from the Pentagon as well as international customers. It is one of the major players in the defense business. Its defense business stands out among its peers by virtue of its broadly diversified programs, strong order bookings and solid backlog.

Management continues to see the tanker programs a profitable long-term franchise projects for Boeing with a need for approximately 400 aircraft worldwide. In 2016, the company won a $2.8 billion contract from the U.S. Air Force for the first 19 KC-46 tankers, which highlights the existent demand and market opportunity for this program. Boeing will start delivering KC-46 tankers to the Air Force in 2017.

Of the recently won notable contracts, worth mentioning is a $371.2 million worth deal that Boeing won for supplying performance-based supply chain support for the F-15 platform. This contract was awarded by the Defense Logistics Agency Aviation, Philadelphia, PA. (Read more: Boeing Wins $371M Contract to Support F-15 Platform)
Again, Boeing secured a modification contract from the U.S. Army for supplying lot 7-11 of AH-64E Apache attack helicopters to the government of Saudi Arabia. Valued at $3.28 billion, this foreign military sales (FMS) contract was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL. (Read more:Boeing Inks $3.3B FMS Deal to Supply AH-64E Apache Copters)

Price Movement

Shares of Boeing have increased 35.1% over the last 12 months, outperforming the Zacks categorized Aerospace–Defense industry’s gain of 25%. This could be because the company’s strong balance sheet and cash flows provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions. The company has also put up strong competition against peers like General Dynamics Corp. GD, Textron, Inc. TXT and Huntington Ingalls Industries, Inc. HII.

Zacks Rank

Boeing currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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