The Boeing Company
) and Bell Helicopter, a unit of
), have received a five-year modification contract worth $4.9
billion for the manufacture of 99 V-22 Osprey tiltrotor aircraft.
Specifically, Bell-Boeing Joint Project Office will produce 92
MV-22 Osprey aircraft for the U.S. Marine Corps, and seven
carrier-variant CV-22s for the U.S. Navy. The contract work is
expected to be completed by Sep 2019.
Taking into account the $1.4 billion preliminary contract that
the joint venture received in Dec 2012, the value of the contract
comes to $6.3 billion. In Dec 2012, the joint venture had
received a contract to produce 21 V-22 Osprey.
Boeing, in collaboration with Bell Helicopter, has built the V-22
aircraft. The V-22 Osprey is a joint service multi-role combat
aircraft that can fly as fast as a plane and land like a
helicopter. The aircraft has the capacity to carry 24 combat
troops, or up to 20,000 pounds of internal cargo or 15,000 pounds
of external cargo.
Diversified network of both the companies negates any specific
business risk. Going forward, Textron's diversified presence
across commercial, manufacturing and industrial products, as well
as financing operations and strong demand for Boeing's defense
products would keep them well-positioned.
However, the adverse effects of sequestration cannot be ignored.
In fact, in April, the budget cuts from sequestration have
reduced the number of contracts awarded by the Department of
Defense to major defense contractors. Defense contractors,
including Boeing, have not been spared from the negative impacts
Lockheed Martin Corp.
Huntington Ingalls Industries Inc.
) are part of this $37 billion sequestration cut made due to the
automatic spending reduction that took effect from Mar 1, 2013.
In Feb 2013, the government had announced $1.2 trillion in
automatic cuts by 2021. In accordance to sequestration, funding
for V-22s has experienced an $18 million reduction.
Boeing presently retains a Zacks Rank #3 (Hold) while Textron
carries a Zacks Rank #4 (Sell).
BOEING CO (BA): Free Stock Analysis Report
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