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 its affordability.
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 cash-strapped governments.
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 month.
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. and 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.
(Zaks Investment Research)