Bell-Boeing JV Wins $219M Contract To Support V-22 Program
Zacks Investment Research | Dec 01, 2019 08:00PM ET
Bell-Boeing, a joint venture (JV) between The Boeing Company (NYSE:BA) and Bell Helicopter — a unit of Textron Inc. (NYSE:TXT) , recently secured a contract to offer performance-based logistics and engineering support to the V-22 platform. Work related to the deal is scheduled to be completed by Nov 30, 2024.
Valued at $218.7 million, the contract was awarded by the Defense Logistics Agency Aviation, Philadelphia, PA. The deal will serve the U.S. Air Force, U.S. Special Operations Command, Navy and foreign military sales. The JV will carry out the tasks in the states of Texas and Pennsylvania.
Attributes of V-22 Jets
Bell-Boeing’s primary product, V-22 Osprey, is a family of multi-mission, tiltrotor military aircraft with both vertical as well as short takeoff and landing capabilities. It is designed to combine the functionality of a conventional helicopter with long-range, high-speed cruise performance of a turboprop aircraft. This military 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.
Apart from its wide usage domestically, this family of tiltrotors has been deployed in numerous missions overseas including casualty evacuation, tactical recovery of aircraft and personnel, humanitarian assistance/disaster relief, resupply, VIP transport along with theater security cooperation. Notably, MV-22 and CV-22 are two variants of the V-22 family of jets.
Our View
Increasing terrorist attacks globally and widespread rise of ISIS have compelled nations to strengthen arsenal and bump up the defense budget in recent times. The present U.S. administration is also in favor of raising defense spending in contrast to the budget sequestration enacted by the prior government.
The U.S. fiscal 2019 defense budget worth $718 billion further supports this fact. The financial plan represented the largest annual amount requested over the five-year period and reflected 4.9% growth over fiscal 2019’s enacted defense budget.
Considering such a bountiful spending provision, defense majors like Boeing and Textron are expected to receive increased flow of contracts from the Pentagon for their high-end defense products. The latest contract win by Bell-Boeing mirrors the same.
We expect such contract inflows to further boost the performance of these two defense contractors and bolster their respective profit margins in the near term.
Price Performance
In a year’s time, shares of Boeing have gained about 1.7% compared with theZacks Investment Research
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