Please ensure Javascript is enabled for purposes of website accessibility

Drones: More Than a Buzzword for Boeing

By Dan Radovsky – Updated Apr 6, 2017 at 9:24PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Boeing's gamble in unmanned aircraft may pay off … one day.

Boeing (NYSE: BA), afraid of falling behind in the drone wars, is building an unmanned aerial vehicle, but without the guarantees of a Defense Department contract.

Boeing's attempt at playing catchup comes after it lost the battle for a $635.8 million Navy contract to build a UAV capable of aircraft carrier take-offs and landings. That contract went to Northrop Grumman (NYSE: NOC), whose new drone is a stealthy flying wing called the X-47B. Northrop Grumman also already produces the Global Hawk, a long-range surveillance drone.

The current king of drone makers is General Atomics, a privately held company. It produces the Predator and Reaper, the UAVs most used for surveillance and hunter-killer missions in Afghanistan and Pakistan. General Atomics is also developing a next-generation combat drone, the Avenger.

Revenge of the Phantom Ray
Looking like a Cylon fighter out of Battlestar Galactica, Boeing's UAV, named the Phantom Ray, had its first flight on April 27. Boeing currently sees the Phantom Ray as a test bed for autonomous (preprogrammed) flying capabilities. It also envisions using the drone for surveillance, ground attacks, and aerial refueling missions.

There's much about UAVs that the military finds is attractive. Not only can they carry out dangerous missions without putting pilots in harm's way, but they can also stay on station much longer than a piloted plane can -- up to 30 hours for current drones. And then there's the bottom line. If you consider the cost of an F-22 strike fighter at about $143 million each, the current price tag for Boeing's Phantom Ray -- $60 million to $70 million -- makes sense for shrinking defense budgets.

The giant gets up off the mat
Boeing took a kick to the teeth when it lost the Joint Strike Fighter competition to Lockheed Martin (NYSE: LMT) a decade ago, but it regained its composure after finally winning the Air Force's $30 billion aerial-refueling-tanker contract last February. It beat out EADS for the deal after a long, tough, and politically controversial fight.

Besides the obvious advantages that UAVs give the military, a look into the crystal ball shows a potential payoff for unmanned flight in the civilian theater of operations as well. If you're interested in following Boeing, add it to My Watchlist.

Fool contributor Dan Radovsky has no position in any of the companies mentioned.

The Motley Fool owns shares of Northrop Grumman and Lockheed Martin. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Boeing Company Stock Quote
The Boeing Company
BA
$131.26 (-5.37%) $-7.45
Lockheed Martin Corporation Stock Quote
Lockheed Martin Corporation
LMT
$413.07 (-2.13%) $-9.01
Northrop Grumman Corporation Stock Quote
Northrop Grumman Corporation
NOC
$478.82 (-3.55%) $-17.64

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.