Japan and China are anything but friendly, but tensions escalated further following China's recent declaration of a maritime air defense zone over the East China Sea. This move also increased tensions between China and the U.S., and Defense Secretary Chuck Hagel said the U.S. military wont adhere to the guidelines of the Chinese-described air-defense zone.
While this situation isn't the best news, it has provided Boeing (NYSE:BA) with the opportunity to show off its new submarine-hunting P-8A Poseidon aircraft. Here's what you need to know.
Poseidon takes on the East Seas
Back in January, Boeing delivered the last of its low-rate initial production P-8As to the Navy. Consequently, the Navy's recent deployment of the P-8As to Japan is the first deployment for this aircraft. Moreover, while this deployment is part of a scheduled deployment and isn't the result of escalating tension in that region, it gives the P-8A a chance to prove itself. Capt. Mike Parker, commander, Task Force 72, told DoD Buzz: "We will demonstrate the ability of the P-8A to operate effectively alongside P-3C during high-tempo deployed operations. I also look forward to the P-8A integrating seamlessly with our international partners and allies -- our interoperability will only get better with Poseidon."
According to Boeing, the P-8A is a next-generation, "long-range anti-submarine warfare, anti-surface warfare, intelligence, surveillance, and reconnaissance aircraft capable of broad-area, maritime, and littoral operations." More importantly, the P-8A has next-gen sensors, which will help improve intelligence, surveillance, and reconnaissance, and help actively mitigate the growing threat of next-gen submarines.
According to DoD Buzz, Rear Adm. Matt Carter, commander, Patrol and Reconnaissance Group, said: "The number of submarines in the world is increasing rapidly. Other countries are either building or purchasing advanced, quiet, and extremely hard to find submarines, and we need to be able to match that technology to be able to detect them."
Accordingly, if the P-8A proves itself capable of handling this growing threat, Boeing could expect additional orders from America's allies. This would be great news for Boeing, as well as Northrop Grumman (NYSE:NOC), which provides the directional infrared countermeasures system and the electronic support measures system, Raytheon (NYSE:RTN), which provides the upgraded AN/APY-10 maritime surveillance radar and signals intelligence solutions, and General Electric's (NYSE:GE) Aviation, which supplies flight-management and stores-management systems.
What to watch
Right now, the Navy plans on purchasing 117 P-8As to replace the P-C3, and India placed an order for eight P-8Is, a derivative of the P-8A designed specifically for the Indian navy. Both of these orders are worth a significant amount of money, but it's only the beginning of what Boeing could expect if the P-8A does well in the East Seas. Further, while the escalating tension between Japan and China isn't great, it does give Boeing a chance to demonstrate the ability of the P-8A. Considering the P-8A is already worth billions for Boeing, anything that showcases its ability, and results in orders, is great news for the company.
Fool contributor Katie Spence owns shares of Northrop Grumman. The Motley Fool owns shares of General Electric, Northrop Grumman, and Raytheon. 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.