Boeing (BA) Wins $75M Repair Deal for Super Hornet Jets

The Boeing Company (NYSE:BA) BA recently clinched a modification contract for providing aircraft inspections along with inner wing panel (IWP) modifications and repairs for the F/A-18 E/F and EA-18G series of jets. The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD

Valued at $75.1 million, the contract is expected to be completed by September 2021. Majority of the work related to this deal will be carried out in in Jacksonville, FL.

Rising Demand for Combat Jets

With rising security threats across the globe, emerging economies like Asia Pacific, the Middle East and South America are spending a lot on enhancing their defense arsenals. On the other hand, developed nations like the United States and Europe have already been leading the defense market.

It is imperative to mention in this context that military aircraft, both manned and unmanned, forms an integral part of a country’s defense products. Notably, emerging trends in the combat aircraft space like fifth-generation technology aircraft, advanced composite materials, and stealth technology have been driving demand substantially.

What Favors Boeing?

Boeing, being the largest aircraft manufacturer in the United States, enjoys a dominant position in the combat aircraft market. Notably, its F/A-18 Super Hornet combat aircraft has emerged as the leading choice of weapon for militaries across the world. In fact, the Royal Australian Air Force and the Kuwait Air Force, apart from the U.S. Navy, operate these fighter aircraft in large numbers. Furthermore, nations like Canada, Finland, Switzerland and Spain currently have Boeing’s Super Hornet in their arsenal.

On the other hand, a variant of the combat-proven F/A-18F Super Hornet, EA-18G Growler offers the most advanced airborne electronic attack (AEA) platform and thus enjoys solid demand from varied nations worldwide. These factors boost the contract winning possibilities of Boeing for production and subsequent repairing of Super Hornet, as is evident from the latest contract. Consequently, such contracts bolster the jet maker’s profit count.

Looking Ahead

Per a Morder Intelligence report, the global combat aircraft market is expected to witness a CAGR of 4% during 2020-2025 time period. Such growth can be attributed to rise in global threats, geopolitical instabilities and increased spending on defense. These projections should benefit combat jet manufacturers like Boeing, Northrop Grumman NOC, Lockheed Martin LMT and Airbus EADSY (OTC:EADSY).

Price Performance & Zacks Rank

Boeing’s shares have lost 58.9% in the past year compared with the industry’s decline of 34.4%.

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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