The Boeing Company
) surged 3.9% to close at $115.67 on Sep 16, 2013 on the back of
twin good news. The probability of the company now winning the
$7.64 billion South Korean contract is high while flight test
announcements for its 787-9 Dreamliner brought in further cause
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Given the upper hand over
Lockheed Martin Corp.
) and Eurofighter, Boeing's economical F-15 Silent Eagle (F-15SE)
will likely be the only bid for South Korea's military fighter
aircraft contest. Lockheed's F-35 and Eurofighter's Typhoon were
over budget, thereby missing the eligibility mark. Seoul is
looking to replace its aging F-4 and F-5 fighters with the
proposed F-15 Silent Eagle.
F-15 Silent Eagle had faced opposition from 15 former South
Korean air force chiefs who had filed a petition against
selecting the aircraft as they believed it lacked the stealth
capabilities of other competing models. However, the defense
minister of Korea seems to like Boeing's jets, mainly because of
Albeit Lockheed's F-35 is technically superior, its bloated price
has compelled the government to shift their attention to Boeing's
F-15SE. This comes as a pat in the back for Boeing's
cost-effective designs that meet the military needs of
More foreign military sales contracts are also much appreciated
in this lukewarm budget environment. With the U.S. Department of
Defense implementing budget austerity under the sequester, this
multi-billion dollar international deal would act as a definite
catalyst to Boeing's military aircraft division.
On the other hand Boeing's Commercial Airplane Group has not
looked back this year, flying high on the success of the Paris
Air Show. The company's latest incarnation of the 787 airplane -
the 787-9 Dreamliner - is all set for its maiden flight this
week. Production of the first 787-9 Dreamliner was completed last
This new variant exceeds the 787-8 by 20 feet in length. Most
importantly, 787-9 will be able to carry 250 to 290 passengers,
up 40 passengers than the 787-8. It has a range of 8,000 to 8,500
nautical miles compared to 787-8's range of 7,650 to 8,200 miles.
First delivery of 787-9 is scheduled to take place in mid 2014 to
the launch customer Air New Zealand. The average cost of a 787-9
Dreamliner is $249.5 million at list prices.
Boeing is the largest aircraft manufacturer in the world in terms
of revenue, orders and deliveries, and one of the largest
aerospace and defense contractors besides other defense giants
like Lockheed Martin,
General Dynamics Corp.
Northrop Grumman Corp.
). In fact, Boeing's defense business accounts for approximately
half of its top line.
Though the company has had glitches with its 787 mascot with
respect to delayed launch or for its battery overheating
incidents in Jan 2013, its share price has proven to be shock
resistant, surging 52.5% year to date. The company presently
retains a short-term Zacks Rank #3 (Hold).