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October 4, 2018 | International, Aerospace

Boeing Wins $63M Navy Deal for F/A & E/A-18 Aircraft Support

By Zacks Equity Research,

The Boeing Company BA recently won a $62.7-million contract for providing inspections, Inner Wing Panel (IWP) modifications, and repairs for the F/A-18 E/F and EA-18G aircraft. Such designated efforts are expected to restore aircraft and IWP service life projections to new design specifications.

Work related to the deal will be majorly carried out in Jacksonville, FL; St. Louis, MI; and Lemoore, CA. The entire task related to the deal is expected to get completed in September 2019. The deal was awarded by the Naval Air Systems Command, Patuxent River, Maryland.

A Brief Note on F/A-18 and E/A-18

Boeing's F/A-18 Block III Super Hornet is a twin-engine, supersonic, all weather multirole fighter jet. The U.S. Navy's tactical and air superiority aircraft is capable of performing virtually every mission in the tactical spectrum, including air superiority, day/night strike with precision-guided weapons, fighter escort, close air support, suppression of enemy air defenses, maritime strike, reconnaissance, forward air control and tanker missions.

Whereas, the EA-18G Growler is the most advanced airborne electronic attack (AEA) platform, which operates from either an aircraft carrier or from land-bases.

What's Favoring Boeing?

Boeing, being one of the major players in the defense business, stands out among its peers by virtue of its broadly diversified programs, strong order bookings and solid backlog. Furthermore, the company's expertise lies in programs related to wide variety of aircraft components, repairs and modification works.

Considering Boeing's combat-proven aerospace programs and associated services along with the rapidly growing need for military aircraft in light of the enhancing geopolitical uncertainties worldwide, the company witnesses a solid inflow of orders from Pentagon. These contract wins, in turn, boost top-line growth for the company's defense business segment.

Evidently, in second-quarter 2018, revenues at the Boeing Defense, Space & Security (BDS) segment, which manufactures military jets like F/A-18, EA-18 Growler and its related components, increased 9% year over year to $5.59 billion. In line with this, we may expect the latest contract win to help this unit deliver similar top-line performance, in coming quarters.

Meanwhile, toward the end of June 2018, the U.S. Senate approved the fiscal 2019 defense budget that provisions for major war fighting investments worth $21.7 billion for aircraft. Boeing, being the largest aircraft manufacturer in the United States, will surely be a significant beneficiary from the budget, which further includes an investment plan of $2 billion for procuring 24 F/A-18E/F aircraft. Such inclusions reflect solid growth prospects for the BDS segment, which, in turn, are likely to boost Boeing's profit margin.

Price Movement

Boeing's stock has gained 53.4% in the past 12 months compared with the industry 's growth of 25.1%. The outperformance was primarily led by the robust worldwide demand for its commercial aircraft and military jets.

Full article: https://www.nasdaq.com/article/boeing-wins-63m-navy-deal-for-fa-ea-18-aircraft-support-cm1032450

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  • Marine Leaders Don't Want New Tech to Weigh Grunts Down

    March 8, 2018 | International, Aerospace, Naval, Land, C4ISR, Security

    Marine Leaders Don't Want New Tech to Weigh Grunts Down

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  • Against Army’s wishes, Congress primes pump to buy newest CH-47 variant for active force

    December 18, 2019 | International, Aerospace

    Against Army’s wishes, Congress primes pump to buy newest CH-47 variant for active force

    By: Jen Judson WASHINGTON — Congressional appropriators and authorizers have increased advance procurement funds for the newest variant of the CH-47 Chinook cargo helicopter as preparation to supply the aircraft to the Army's active force, even though the service asked to only buy a small number of the helos in fiscal 2020 for special operations. The service's decision to cut the aircraft from the active force was based on the need to free up future cash to cover the cost of an ambitious plan to buy two new future vertical lift aircraft for long-range assault and attack reconnaissance missions. But Congress has gone against the Army's wishes to divert funding away from procurement for the active force, instead adding $28 million in FY20 funding — in both the recently released spending and policy bill conference reports — for advance procurement to begin to prime the pump to restore CH-47F Block II deliveries to the conventional Army. The cut the service made would only buy 69 special operations variants — or "G" models. The original plan was to procure 473 "F"-model Block II helicopters for the active force. The Army approved the Block II effort to move into the engineering and manufacturing development phase in April 2017, and the program officially began in July 2017. In October 2018, the first two EMD Block II Chinooks were already on the assembly line with plans to fly in mid-2019. Boeing, which manufactures the aircraft, expects a production decision in July 2021. While $28 million won't get the service much, based on the original plan the Army would start building five CH-47F Block IIs in 2021 meant for the active force. The advance procurement in FY20 would support buying longer-lead items from suppliers, but is still a stretch to claim that the additional funding restores the program. Those five aircraft would be delivered in 2023 based on Boeing's typical three-year lead time to build an airframe. It remains to be seen whether the congressional plus-up will prompt the Army to restore funding for the five CH-47F Block IIs in its FY21 budget request due out early next year. It's also unclear how many of those long-lead parts procured in FY20 could be used in G-model aircraft or are exclusive to F-models. Therefore, it's also murky how much of the $28 million in parts might be wasted if the Army sticks to its plan to only procure G-model aircraft. The Army has indicated it might reconsider the CH-47F Block II cut; the FY21 budget request, when it is released, will likely reveal the Army's decision. Shortly after the service's plan to cut the CH-47F Block II was revealed in its FY20 budget request, then-Army Vice Chief of Staff Gen. James McConville, who is now chief, told reporters the Army was comfortable with its decision, but tempered that, adding: “I think in two to three years, we will have a better idea about where we are, as far as developing the helicopters we talked about, and that will drive the decision.” McConville was referring to the Army's plan to buy two future vertical lift aircraft. The same day, then-Army Secretary Mark Esper, who is now defense secretary, told another group of reporters that the service would not be rethinking its plans to build CH-47 Block IIs for the conventional force. The Army has also claimed it is pursuing foreign military sales of its CH-47F Chinooks to soften the blow from cuts made to its intended buy of the Block II variant, but none of the possible sales — to the United Kingdom or to the United Arab Emirates — were newly in the works at the time. And neither country has plans to buy Block II variants. Moreover, the number of helicopters the two countries plan to procure amount to less than 30 aircraft. https://www.defensenews.com/land/2019/12/17/against-armys-wishes-congress-primes-pump-to-buy-newest-ch-47-variant-for-active-force

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