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Boeing (BA) Wins $128M Contract to Aid CH-47 Chinook Helicopter

The Boeing Company BA recently secured a modification contract for its CH-47 Chinook helicopter. The award has been offered by the Army contracting Command, Redstone Arsenal, AL.

Valued at $127.5 million, the contract is expected to be completed by Sep 30, 2028. Per the terms of the deal, Boeing will procure sustainment parts for CH-47 aircraft.

What’s Favoring Boeing?

As nations across the globe continue to strengthen their defense structures, spending on military arms and ammunition that boast technologically advanced features continues to increase manifold. This also includes increased investments in military helicopters that play a critical role in air warfare missions.

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To this end, it is imperative to mention that Boeing’s CH-47 Chinook is an advanced, multi-mission, tandem-rotor helicopter, proven in cargo and troop transport, search and rescue, casualty evacuation, special operations, humanitarian and disaster relief, and more. It can be equipped with extended-range fuel tanks and fitted for air-to-air refueling capability. This implies that the Chinook can fly farther than ever before.

Such remarkable features of this aircraft must have been boosting its demand, which, in turn, has prompted Boeing to provide a broad spectrum of services, from performance-based logistics contracting and integrated fleet support to vertical lift maintenance, modifications and repairs. The latest contract win bears a bright example of that.

Considering the fact that CH-47 is the heavy-lift helicopter of choice for the U.S. Army and 20 international operators, with more than 950 Chinooks deployed worldwide, we may expect Boeing to win more similar contracts involving sustainment parts supply in the near future.

Growth Prospects

Rising military conflicts, terrorism, border disputes, territory invasions and violations have forced nations to increase their defense spending toward procuring combat-proven helicopters to enhance their aerial security in recent times. To this end, the Mordor Intelligence firm expects the military helicopters market to witness a CAGR of more than 2.9% during the 2024-2030 period.

Such expanding market prospects should boost Boeing’s growth, thanks to its established position in manufacturing combat helicopters like AH-64 Apache, MH-139 and AH-6 light attack helicopter, apart from Ch-47 Chinook.

Other defense primes that are expected to reap the benefits of the military helicopter market have been discussed below.

Airbus EADSY is one of the world's largest suppliers of advanced military helicopters. Some of its military helicopters are H125M, H135, H145M, AS565MBe, H160M, H175M, H215M, H225M, etc.

Airbus boasts a long-term earnings growth rate of 17.9%. The Zacks Consensus Estimate for EADSY’s 2024 sales indicates an improvement of 8.2% from the 2023 reported figure.

Lockheed Martin’s LMT Sikorsky business unit provides military and rotary-wing aircraft to all five branches of the U.S. armed forces, along with military services and commercial operators in 40 nations. Some of LMT’s renowned products are Armed Black Hawk, CH-53K, MH-60R, Defiant X, Raider X, S-97 Raider, FireHawk, etc.

Lockheed boasts a long-term earnings growth rate of 4.1%. The consensus estimate for LMT’s 2024 sales indicates an improvement of 3.2% from the 2023 reported figure.

Textron’s TXT Bell business supplies advanced military helicopters and provides parts and support services to the U.S. government and military customers outside the United States. TXT Bell’s primary U.S. government programs are for the production and support of the V-22 tiltrotor aircraft and H-1 helicopters.

Textron boasts a long-term earnings growth rate of 10.1%. The consensus mark for TXT’s 2024 sales indicates an improvement of 5.6% from the 2023 reported number.

Price Movement

Shares of Boeing have lost 1.5% in the past three months compared with the industry’s 6.2% decline.

Zacks Investment Research
Zacks Investment Research


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Zacks Rank

Boeing currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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