HomeMost PopularInvestingBoeing Lands Enormous $2.3 Billion Deal to Construct Multirole KC-46A Tanker Jet

Boeing Lands Enormous $2.3 Billion Deal to Construct Multirole KC-46A Tanker Jet

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Boeing’s BA Defense, Space & Security business segment clinched a substantial modification contract for the KC-46A Tanker aircraft. The lucrative deal was bagged from the Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, OH.

Deal in Detail

The contract, valued at $2.33 billion, is slated for completion by Jul 31, 2027. Boeing will manufacture 15 KC-46A aircraft from the 10th lot as per the terms of the deal. The related work will be executed in Seattle, WA.

Impact of KC-46

The KC-46 Pegasus serves as a wide-body, multirole tanker that has the capability to refuel all U.S. allied and coalition military aircraft compatible with international aerial refueling procedures. The aircraft is also equipped with the ability to detect, avoid, defeat, and survive threats using multiple layers of protection, enabling it to operate securely in medium-threat environments.

Boeing’s Advantage

Given the escalating security threats worldwide, emerging economies such as the Asia Pacific, the Middle East, and South America are heavily investing in fortifying their defense capabilities. Additionally, established nations like the United States and Europe have been leading the defense market for quite some time.

It is crucial to underscore that military aircraft, both manned and unmanned, are integral to a country’s defense arsenal. Notably, evolving trends in the combat aircraft sphere such as fifth-generation technology aircraft, advanced composite materials, stealth technology, and refueling jets like KC-46 have been significantly driving demand. Impressively, KC-46A is the only multi-mission tanker produced in America for the U.S. Air Force and its allies.

Boeing has already delivered 70 KC-46A tankers to the U.S. Air Force and is currently under contract to deliver four aircraft to Japan’s government. These figures are a testament to the robust demand for this aircraft in the combat aviation sector, leading to continued contract flows for Boeing. The recent contract win is a clear example of this trend.

Future Growth

According to a report from Mordor Intelligence, the global military aviation aircraft market is projected to witness a CAGR of 7.4% during 2023-2028, with North America holding the largest market share.

These developments can be attributed to increasing global threats, geopolitical instabilities, and augmented defense expenditure. These projections are expected to benefit Boeing and other U.S.-based combat jet manufacturers such as Lockheed Martin LMT, Northrop Grumman NOC, and Textron TXT.

Lockheed’s Aeronautics business segment is involved in the research, design, development, manufacture, integration, sustainment, support, and upgrade of advanced military aircraft, including combat and air mobility aircraft, unmanned air vehicles, and related technologies. Its major programs encompass F-35, C-130 Hercules, F-16 Fighting Falcon, and F-22 Raptor jets.

Lockheed boasts a long-term earnings growth rate of 8.6%. The stock has a four-quarter average earnings surprise of 4.35%.

Northrop Grumman, since its inception, has been at the forefront of manned aircraft development for combat. Its product portfolio ranges from fighter jets to stealth bombers, including the B-2 Spirit Stealth bomber, E-2D Hawkeye jets, F-20 Tigershark, and more. 

Northrop Grumman boasts a long-term earnings growth rate of 2.4%. The Zacks Consensus Estimate for NOC’s 2023 sales implies a 6.6% improvement from the 2022 reported figure.

Textron’s business unit, Textron Aviation Defense, specializes in designing, building, and providing support for versatile and globally renowned military aircraft preferred for training and attack missions such as the Beechcraft T-6C trainer and AT-6 Wolverine.

Textron boasts a long-term earnings growth rate of 11.7%. The Zacks Consensus Estimate for TXT’s 2023 sales implies a 6.4% improvement from the 2022 reported figure.

Stock Performance

Boeing’s shares have surged 26.8% over the past year, while the industry has witnessed a decline of 12.2%.

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Zacks Rank

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

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The Boeing Company (BA) : Free Stock Analysis Report

Lockheed Martin Corporation (LMT) : Free Stock Analysis Report

Northrop Grumman Corporation (NOC) : Free Stock Analysis Report

Textron Inc. (TXT) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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