The Boeing Company (BA) has received a sizable contract from the UK Ministry of Defense (“MOD”) worth $1.64 billion or 1 billion pounds Sterling to provide 14 new CH-47 Chinook helicopters and associated support to the Royal Air Force (“RAF”) for the first five years.
The CH-47 Mk-6 Chinook has a new, machined monolithic airframe with UK-specific avionics, forward-looking infrared radar, a rescue hoist, aircraft defensive systems, and interoperable communication and navigation equipment. It will act as a part of MOD's Strategic Helicopter Vision to modernize their helicopter force structure.
Chinook is the backbone of the RAF’s helicopter fleet. With this contract, the RAF fleet will expand its number of Chinooks to 60. The new helicopters will be compatible with the existing UK Chinook fleet. The performance of the Chinook in Afghanistan and Iraq has proved its unique ability to meet diverse mission requirements.
For more than 30 years, RAF has been operating Chinooks from the Falkland Islands to Iraq and Afghanistan. It has established innovative procedures to operate its Chinooks in conjunction with other aircrafts. Both RAF and MOD have worked closely with Boeing to implement performance-based logistics initiatives to increase the readiness of their Chinook fleet.
The new aircrafts will be produced at Boeing's Ridley Township facility near Philadelphia and are scheduled for delivery from 2013 through 2015.
The Boeing Company is among the best positioned in its sector due to its balanced exposure to commercial aircraft and defense equipment. With the gradual recovery of the global economy, we believe freight and passenger traffic will improve going forward. Meanwhile, the U.S. defense budget is also skewed towards a number of prominent Boeing programs. It also has a long-standing and growing relationship with the United Kingdom, its military and its aerospace industry.
However, in the near term, headwinds over 787 delays and expected cutbacks in the U.S. defense budget loom large over the current valuation of the company. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Headquartered in Chicago, Boeing Company is a premier jet aircraft manufacturer and one of the largest defense contractors in the U.S. The company’s customers include domestic and foreign airlines, the U.S. Department of Defense, the Department of Homeland Security, the National Aeronautics and Space Administration, other aerospace prime contractors, and certain U.S. government and commercial communications customers. The company mainly competes with Northrop Grumman Corporation (NOC) and Lockheed Martin Corporation (LMT).
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