Boeing (BA) Wins $757M Deal to Supply P-8A Jets to Germany
The Boeing Company BA recently secured a modification contract for the production and delivery of 12 P-8A jets to Germany. The Naval Air Systems Command, Patuxent River, MD, awarded the deal.
Valued at $756.6 million, the contract is expected to be completed in February 2025. The majority of the work related to this deal will be executed in Seattle, WA.
Importance of P-8A Poseidon
The P-8A Poseidon, a multi-mission maritime patrol aircraft, can perform anti-submarine and anti-surface warfare, intelligence, surveillance and reconnaissance, and search and rescue missions. Seven nations across the globe have selected the P-8A as their future maritime patrol aircraft including South Korea and New Zealand. In February 2020, Britain’s Royal Air Force (RAF) received its first P-8A aircraft, which will be instrumental in monitoring Russian submarine activities.
In March 2021, Boeing won a $1.6 billion contract for the production and delivery of 11 P-8A jets to the U.S. Navy and the government of Australia. In March 2020, Boeing had won a $1.5 billion worth contract for manufacturing 18 aircraft for the U.S. Navy, the Republic of Korea’s Navy, and the Royal New Zealand Air Force. Such frequent contract inflows indicate the global demand that this jet model enjoys.
What’s Favoring Boeing?
Of the varied defense equipment that Boeing manufactures, the company’s strength lies in the development of combat-proven aircraft, such as the P-8A Poseidon. Additionally, Boeing started developing military aerial refueling and strategic transport aircraft for its fixed-wing military aircraft programs. Such notable developments are anticipated to fuel this aerospace giant’s growth, considering the increasing defense spending provisions made by the current U.S. administration.
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.
Growth Prospects
Per a Mordor Intelligence report, the global maritime patrol aircraft market is anticipated to witness a CAGR of 6.4% during the 2021-2026 period. The heightening threat of global terrorism and geo-political issues alongside the need to replace aging maritime patrol aircraft with a new and advanced fleet will likely spur demand for maritime patrol aircraft during the forecast period, thereby boosting growth in the market.
Notably, major industry players poised to gain from surging maritime aircraft demand include Boeing, Lockheed Martin LMT, Textron TXT, and Northrop Grumman NOC.
Notably, Lockheed’s maritime patrol aircraft, P-3 Orion performs air, surface, and subsurface patrol, and reconnaissance tasks over extended periods and far from support facilities.
Textron’s King Air 260 jets provide the right balance of durability and operating economics for maritime patrol missions.
Northrop Grumman’s MQ-4C Triton unmanned aircraft system provides real-time intelligence, surveillance and reconnaissance over vast ocean and coastal regions.
Zacks Rank and Price Movement
In a year’s time, shares of Boeing, a Zacks Rank #2 (Buy) company, have surged 37.1% against the industry's 5.7% decline.
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