Boeing Bags B-52 Contract - Analyst Blog

Boeing Co. (BA) has won a $750 million U.S. Air Force contract for modernization and maintenance of the B-52 Stratofortress bomber fleet's weapons system. Boeing’s B-52 Stratofortress is a long-range, subsonic, jet-powered strategic bomber, which first entered combat in 1965 over Southeast Asia during the Vietnam War.

The $750 million order will boost the Integrated Defense Systems segmental order backlog. Integrated Defense Systems order backlog decreased from $70 billion at the end of the first half of fiscal 2009 to $65.8 billion at the end of the recent quarter. The reduction in backlog was primarily due to the termination of the manned ground vehicle section of the Future Combat Systems contract.

Headquartered in Chicago, Boeing is the world’s largest manufacturer of commercial jet liners and military aerospace products (based on total sales). Boeing designs and produces commercial airplanes, defense systems, and civil and defense space systems. It is also the largest NASA contractor. Non-airplane products include helicopters, electronic and defense systems, missiles, satellites, rocket engines, launch vehicles, and advanced information and communication systems.

Boeing is among the best-positioned companies among its defense peers due to its balanced exposure to commercial aircraft and defense equipment. Defense peers like Lockheed Martin Corp. (LMT) and Northrop Grumman Corp. (NOC) deal only in defense equipment.
 
Going forward, we believe the $320 billion order backlog, strong order booking, stable cash-flow generation and a globally diversified customer base will help maintain the growth momentum. However, a bearish commercial aerospace market, apprehension over growth in defense spending, and delays in the launch of the 787 series jetliner will affect its performance in the near term.

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