The U.S. is in the middle of major defense budget cuts because of sequestration, but Saudi Arabia is clearly not in the same predicament. In fact, the Royal Saudi Air Force, or RSAF, is in the middle of a fleet modernization program and has gone on a veritable shopping spree with U.S defense contractors. More pointedly, this latest venture is the largest foreign arms sale in U.S. history. For Boeing's (NYSE:BA) F-15SA, in particular, this is excellent news.
Boeing on target
In 2011, Air Force officials announced that the RSAF would purchase 84 new Boeing F-15SA fighters and upgrade 70 of its current F-15C/D Eagle Fleet aircraft to the SA configuration -- since reduced to 68 upgrades -- in a deal worth $3.5 billion for Boeing, and part of a $29.4 billion foreign military sale between the U.S. and Saudi Arabia.
Since then, Boeing's F-15SA successfully completed its maiden voyage, and met all of the test objectives, on Feb. 20, and in a financial statement released on July 3, Boeing revealed that three F-15SAs had been delivered for the flight trials campaign. Although the report didn't specify delivery to Saudi Arabia, the RSAF is currently the only customer for the new F-15SA.
Put together, these reports indicate that Boeing's F-15SA is on track for its scheduled 2015 delivery to the Kingdom of Saudi Arabia. Further, Col. Robert Stambaugh, the Air Force Security Assistance program manager for the F-15SA program at Robins Air Foce Base, Ga., stated, "Completing this major milestone in less than one year after program implementation was truly remarkable." Great news for Boeing. It's also great news for Lockheed Martin (NYSE:LMT), which is helping with modernization of the F-15s, for the fixed price of $253.4 million.
Clear skies ahead
The news that Boeing is on track with its F-15SA is certainly welcome, especially given the latest issues with the Dreamliner. And while nothing is certain regarding an on-time delivery of the F-15SAs, right now, it looks promising.