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Boeing Wins $1.6B S. Korean Contract

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Aerospace giant The Boeing Company (BA) is all set to receive a $1.6 billion (or 1.8 trillion won) order from South Korea. The sizeable order comes in the wake of heightened tensions with North Korea, as per media reports.

The Korea Defence Acquisition Program Administration (:DAPA) revealed that South Korea plans to buy a fleet of Boeing’s 36 AH-64E Apache Guardian choppers over a three-year period starting 2016. The contract also enables Boeing to provide training and logistical support. The decision comes after tension between North and South Korea escalated following North Korea's third nuclear test in February.

Boeing’s Apache, with a cruising speed of 261 kilometers (162.2 miles) per hour, is a twin-engine, four-bladed, two-pilot helicopter that scored high ratings for its engine competency and weapons load. Apache is also noted for its target acquisition potential. For the contract, this 17.7-meter-long chopper had to compete with the AH-1Z Viper manufactured by Bell Helicopter, a unit of Textron Inc. (TXT), and the Turkish Aerospace Industry's T-129B.

Boeing has a unique position as the largest aircraft manufacturer in the world in terms of revenues, orders and deliveries. Besides, it is one of the largest aerospace and defense contractors in the world. Also, its revenues are spread across more than 90 countries around the globe.

The latest contract is expected to bring some relief for this Aerospace behemoth, as its technologically sound 787 model is still grounded due to battery problems. Although we are still uncertain about the outcome, consistent order booking of other variants of commercial airplanes along with the order for this new fleet of advanced attack helicopters is nevertheless helping the company.

Recently, Boeing received orders worth $4 billion for a cumulative 27 commercial airplanes. The orders include 17 airplanes of the 737 model. United Continental Holdings Inc. (UAL) ordered eight 737-900ERs, Qantas ordered five aircrafts and leasing company GECAS ordered for another four airplanes. On the other hand, 10 big 777 airplanes have been ordered by Air Lease Corp. (AL).

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

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