The U.S. Defense Security Cooperation Agency notified Congress Friday of plans to sell the government of Saudi Arabia a package of follow-on support and services for Royal Saudi Air Force (RSAF) aircraft and associated equipment, parts, training, and logistical support.
Specifically, DSCA notes that the Saudis are seeking maintenance, logistics, repair, and other services for their arsenal of military aircraft, for the engines that power them, and for the weapons that arm them. In total, the parts and services being sought are estimated to be worth $1.2 billion.
DSCA notes that "there is no prime contractor involved in this proposed sale." Given that the sale concerns RSAF aircraft, it would appear that the likely beneficiaries of this contract would include the contractors who built the planes being maintained and serviced. In this vein, and among others, the RSAF air fleet comprises:
- transport, fighter, and airborne early warning aircraft from Boeing (NYSE:BA)
- Lockheed Martin (NYSE:LMT) transport planes such as the C-130 Hercules
- old F-5 Tiger fighter jets (now used primarily for flight training) from Northrop Grumman (NYSE:NOC).
Justifying the proposed sale, DSCA advised Congress that Saudi Arabia is "a friendly country which has been and continues to be an important force for political stability and economic progress in the Middle East," and that Saudi Arabia "needs this follow on maintenance and logistical support to sustain the combat and operational readiness of its existing aircraft fleet."
DSCA assured Congress that "this proposed sale ... will not alter the basic military balance in the region," nor will it adversely "impact on U.S. defense readiness."
Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin and Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.