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General Dynamics (GD) Wins $696M Deal to Aid C-20 & C-37 Jets

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General Dynamics Corp.’s GD subsidiary, Gulfstream Aerospace, recently secured a contract, involving the C-20 and C-37 aircraft. The deal has been awarded by the U.S. Air Force Life Cycle Management Center.

Valued at $696 million, the contract’s engineering services part represents a $612 million deal, while contractor logistics support (CLS) is worth $84 million. This brings the cumulative face value of the contract to $594 million.

Per the terms, Gulfstream will offer engineering services, aircraft modifications, configuration management, data delivery and publication management.

Brief Note on C-20 & C-37 Jets

The C-20 is a military version of the Gulfstream IV aircraft, which are capable of all-weather, long-range, high-speed, nonstop transoceanic flights. On the other hand, C-37A is a military version of the Gulfstream V, while C-37B is a military version of the Gulfstream 550 aircraft. These are low-wing jets powered by two turbofan engines equipped with thrust reversers capable of all-weather, long-range, and high-speed nonstop flights.

Rising Demand for Combat Jets Aids Gulfstream

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 form an integral constituent of a country’s defense products. Notably, emerging trends in the combat aircraft space like turbofan engines equipped with thrust reversers like that found in C-20 and C-37, along with advanced composite materials and stealth technology have been driving demand substantially.

Being one of the prominent jet makers in the United States, Gulfstream thus enjoys a smooth flow of contracts for military jets and its associated upgrades. The latest contract win is an example of the same.

Looking Ahead

Per a Morder Intelligence report, the global combat aircraft market is expected to witness 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 General Dynamics, Boeing BA, Northrop Grumman NOC and Lockheed Martin LMT.

Price Performance

In a year’s time, shares of General Dynamics have gained 30.4% compared with the industry’s rise of 22.1%.

Zacks Rank

General Dynamics currently carries a Zacks Rank #5 (Strong Sell).

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