The Boeing Company BArecently secured a $24.8 million contract for procuring the Advanced Airborne Sensor (AAS) Peculiar Support Equipment (PSE) to support the U.S. Navy’s P-8A Poseidon maritime surveillance aircraft. Work related to the deal is expected to complete in March 2022.
Details of the Deal
Per the terms, Boeing will provide logistics and engineering data for the PSE.
The contract was awarded by the Naval Air Warfare Center Aircraft Division, Lakehurst, NJ. Majority of the work will be carried out in Richardson, TX. Boeing will utilize fiscal 2016 aircraft procurement (Navy) funds for completing the task.
What’s P-8A Poseidon?
Boeing's P-8A is an aircraft designed for long-range anti-submarine warfare, anti-surface warfare, maritime surveillance and reconnaissance missions, capable of broad-area maritime and littoral operations. It is also effective at search and rescue missions. P-8 is a derivative of the Next-Generation 737-800, which combines Superior performance and reliability with an advanced mission system that ensures maximum interoperability in the future battle space.
A Brief Note on AAS and PSE
The AAS is multi-function radar installed on the P-8 Poseidon aircraft, designed to provide multi-function detection and tracking of moving targets, and high resolution ground mapping of land, littoral and water areas.
On the other hand, Peculiar Support Equipment (PSE) supports the P-8 Poseidon along with other major aircraft programs by offering flight line and intermediate maintenance level test equipment as well as automated test equipment for the complete range of aircraft systems.
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. Its defense segment, known as Boeing Defense, Space & Security (BDS), witnessed approximately 13% year-over-year increase in first-quarter 2018 revenues to $5.76 billion, driven by higher weapons deliveries. We believe, the latest contract, along with the other notable ones that the company won in recent times, will allow the BDS segment to reflect similar solid results in upcoming quarters as well.
In particular, among other defense equipments, Boeing’s key forte lies in the development of combat-proven aircraft such as the P-8A Poseidon. Also, the company has lately started developing military aerial refueling and strategic transport aircraft, for its fixed-wing military aircraft programs. Such capabilities have enabled Boeing in clinching a huge number of contracts from the Pentagon on a frequent basis.
Meanwhile, President Trump proposed fiscal 2019 defense budget in February that provisioned major war fighting investments of $21.7 billion for aircrafts. Further, it also included an investment plan of $2.2 billion for 10 P-8A Poseidon Jets. Such proposed inclusions reflect solid growth prospects for the BDS segment, which in turn are likely to boost the company’s profit margin.
Price Movement
Boeing’s stock rallied about 92.8 % in a year compared with the industry’s gain of 42%. The outperformance was primarily led by the robust worldwide demand for its commercial aircraft and for its military jets.