A month after the scandal-induced removal of Chief Financial Officer Mike Sears and the subsequent resignation of Chief Executive Officer Phil Condit, it's business as usual at Boeing (NYSE:BA). Yesterday afternoon, the company announced that it had received an $8.6 billion multiyear contract from the Navy to produce 210 F/A-18 Super Hornets, and another $1 billion contract for system design and development (SDD) of the EA-18G airborne electronic attack aircraft.
In what is the second multiyear contract for the Super Hornet program, the Navy will purchase 42 aircraft in each of the fiscal years 2005 through 2009, with the option to increase the order by up to six aircraft per year. Boeing has already produced 170 Super Hornets under the first deal, which calls for the delivery of 222 aircraft and ends in 2004.
The five-year SDD program for the EA-18G runs from fiscal year 2004 through 2009. According to Boeing, the new aircraft will carry jamming equipment and self-defense missiles. Upon introduction, the EA-18G will be "capable of self-protection, freeing up dedicated escort aircraft for strike and other missions." It will also be able to rapidly locate and destroy surface-to-air missiles.
The $9.6 billion in contracts are a nice score for Boeing, even if somewhat expected. Business as usual is far more preferable than the recent alternatives.
A number of other companies benefit from the deals as well. Northrop Grumman (NYSE:NOC) provides the center and aft fuselage for the Super Hornet, as well as the electronic combat system for the EA-18G. General Electric (NYSE:GE) makes the aircraft's engines, while Raytheon (NYSE:RTN) supplies the radar. Boeing builds the forward fuselage and wings and is responsible for final assembly.
Add your own Foolish perspective on the deal on the Boeing discussion board.
Jeff Hwang can be reached at [email protected].
