The Boeing Company ((BA) – Free Report) recently clinched a modification contract to support the 11 P-8A Poseidon aircraft program. The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD.
Details of the Deal
Valued at $24 million, the contract is projected to be completed in February 2024. Per the terms, Boeing will procure additional software builds to provide correction of deficiencies, to include software enhancements or improvements, engineering analyses and evaluations, and integration and test activity for supporting the P-8A Increment 3 Acoustics Multi-static Active Coherent (MAC) Enhancements program.
Notably, the MAC system is an active sonar system composed of two types of sonobuoys (source and receiver) and an acoustic processing and aircraft mission computer software suite. It is employed by the Navy’s maritime patrol aircraft (P-3Cs and P-8As) to search for and locate threat submarines in a variety of ocean conditions.
Majority of the work related to the deal will be executed in Huntington Beach, CA.
Importance of P-8A Poseidon
The P-8A Poseidon is militarized with maritime weapons, which patrol the globe, performing anti-submarine and anti-surface warfare, intelligence, surveillance and reconnaissance, and search and rescue missions. Seven nations across the globe have selected the P-8A as their future maritime patrol aircraft including South Korea and New Zealand.
This indicates the global demand that this jet model enjoys, which is further evident from the latest contract win.
What’s Favoring Boeing?
Of the varied defense equipment that Boeing manufactures, the company’s strength lies in the development of combat-proven aircraft, such as P-8A Poseidon. Additionally, Boeing started developing military aerial refueling and strategic transport aircraft for its fixed-wing military aircraft programs. Such notable developments are anticipated to fuel this aerospace giant’s growth, considering the increasing defense spending provisions made by the current U.S. administration.
Being the United States’ largest jet maker, Boeing enjoys a smooth flow of contracts for military jets and its associated upgrades. The latest contract win is an example of the same.
Per a Mordor Intelligence report, the global maritime patrol aircraft market is anticipated to witness a CAGR of more than 3% during the 2020-2025 period. The heightening threat of global terrorism and geo-political issues alongside the need for replacing ageing maritime patrol aircraft with a new and advanced fleet will likely spur demand for maritime patrol aircraft during the forecast period, thereby boosting growth in the market.
Notably, major industry players poised to gain from surging maritime aircraft demand include Boeing, Lockheed Martin (LMT – Free Report) , Textron (TXT – Free Report) and Northrop Grumman (NOC – Free Report) .
Zacks Rank and price Movement
In a year’s time, shares of Boeing, a Zacks Rank #3 (Hold) company, have surged 66.2% compared with the industry’s 25.3% rise. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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