The Boeing Co. BA has won a modification contract from the U.S. Air Force for the production of KC-46 Lot 3.
Contract Details
The contract is valued at $2.1 billion. It was awarded by the Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, OH.
Per the contract, Boeing will provide 15 KC-46 aircraft, data, two spare engines and five wing refueling pod kits.
Prior to this contract, the Air Force had awarded a contract for 19 KC-46 aircraft valued at $2.8 billion. The first aircraft was scheduled to be delivered by March but has been delayed up to the end of 2017.
Work is scheduled to be completed by Jul 30, 2019 and will be executed in Seattle, WA. The contract will use fiscal 2017 aircraft procurement funds.
A Brief Note on KC-46
Manufactured on the air frame of Boeing’s 767 commercial jet, KC-46 is the first new U.S. tanker since the 1980s. In the words of Leanne Caret, Boeing’s Defense, Space & Security president and CEO, “The KC-46 tanker will provide the Air Force unprecedented refueling capabilities, operational flexibility and combat readiness”.
The wide-bodied KC-46 Pegasus is a multirole tanker that can refuel all U.S., allied and coalition military aircraft compatible with international aerial refueling procedures, according to the company.
About Boeing
Boeing witnesses a steady flow of contracts from the Pentagon as well as international customers. It is one of the major players in the defense business. Its defense business stands out among its peers by virtue of its broadly diversified programs, strong order bookings and solid backlog.
Recently, Boeing reported its fourth-quarter 2016 results wherein earnings came in at $2.47 per share, up 54.4% from the year-ago figure of $1.60. The company's revenues amounted to $23.29 billion in the reported quarter, declining 1.2% year over year. Backlog at the end of the fourth quarter was $473.0 billion.
Price Movement
Shares of Boeing have gained 38% over the last 12 months, outperforming the Zacks categorized Aerospace–Defense industry’s gain of 26.1%. This could be because the company’s strong balance sheet and cash flows provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions. The company has also put up strong competition against peers like General Dynamics Corp. GD, Textron, Inc. TXT and Huntington Ingalls Industries, Inc. HII.
Zacks Rank
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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