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Bell-Boeing, a joint venture (JV) between The Boeing Company BA and Bell Helicopter — a unit of textron inc. TXT – recently secured a modification contract involving the V-22 aircraft program. Work related to the agreement is expected to be completed by September 2024.
Agreement details
Valued at $170.4 million, the contract was awarded by Naval Air Systems Command, Patuxent River, MD. Under the terms, the joint venture will drive the production and delivery of one variable-quantity CMV-22B aircraft for the US Navy and exercise options for V-22 Common Configuration Readiness and Modernization Batch 4 requirements ( CC-RAM).
The majority of the job will be performed in Ridley Park, PA.
Growth in demand for jets and V-22 jets
A rapid increase in terrorist attacks has forced nations to strengthen their arsenals and increase their defense budgets. With the United States being the largest exporter of defense equipment worldwide, the country enjoys a steady stream of contracts for its combat-proven weapons from the Pentagon and its foreign allies. With jet planes and military helicopters making up the bulk of a country’s armament, there is a steady stream of contracts for these armaments.
Notably, Bell-Boeing’s main product, the V-22 Osprey, is a family of multi-mission tiltrotor military aircraft with vertical and short take-off and landing capabilities. It is designed to combine the functionality of a conventional helicopter with the long-range, high-speed cruise performance of a turboprop aircraft. Notably, the CMV-22B is a variant of the V-22 family of jet aircraft and meets the urgent logistics air connector requirements of the Joint Force Maritime Component Commander (JFMCC) by transporting personnel, mail and priority freight from the forward bases to the maritime base.
In addition to its wide domestic use, this family of tiltrotors has been deployed in numerous missions overseas, including casualty evacuation, tactical recovery of aircraft and personnel, humanitarian aid/disaster relief disaster, resupply and VIP transport as well as theater security cooperation. Undoubtedly, with the growing demand for military aircraft, these tiltrotors enjoy a decent demand pool across the world. The latest agreement won is a shining example of this.
Outlook for jet manufacturers
According to a forecast by Research and Markets, the global military aircraft market size is expected to register a CAGR of over 2.5% during the period 2020-2025. This will surely benefit major US fighter aircraft manufacturers like Bell-Boeing, Lockheed LMT and Northrop Grumman NOC, North America dominating this market space.
Price Movement and Zacks Ranking
Textron’s stock has gained 8.1% over the past year against a 24.5% decline in the industry. Boeing shares have lost 32.3% over the past year, compared to a 24.5% decline for the industry.
While Textron currently carries a Zacks Rank #3 (Hold), Boeing has a Zacks Rank #4 (Sell).
You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Northrop Grumman Corporation (NOC): Free Stock Analysis Report
The Boeing Company (BA): Free Inventory Analysis Report
Lockheed Martin Corporation (LMT): Free Stock Analysis Report
Textron Inc. (TXT): Free Stock Analysis Report
