Boeing Gets $1.1B Contract, Says 787 on Track

Includes: BA, NOC, PAGI
by: Susan Lerner

Aerospace giant Boeing said it received a $1.1B deal from the U.S. Air Force to continue providing programmed depot maintenance for the nation's KC-135 Stratotanker fleet. The 10-year deal will cover 200 aerial refueling aircraft at facilities in Texas, Oklahoma and Missouri. Since the initial KC-135 PDM contract award in October 1998, Boeing said it has completed scheduled (conducted every five years) and unscheduled maintenance on more than 160 aircraft. Boeing beat out a division of Pemco Aviation Group for the contract, and also is competing against Northrop Grumman for a $40B deal to replace some 179 aerial refueling tankers (full story). Separately, at an investor conference, Boeing CEO James McNerney said the new 787 remains on track for May delivery despite the recently announced delay in the first test flights. He admitted, however, that there was no space for error. "Is there room for major glitches at this stage? The answer is no. We're tight ... We're down to the program having to go by the book." McNerney also said the case for an extended strong order cycle for commercial aircraft is "very good" and that the number of new aircraft orders should continue to exceed annual deliveries for the foreseeable future. Boeing shares closed up 2.2% to $97.44.

Sources: Press release,, Wall Street Journal, AP
Commentary: Defense Sector Continues to Run • Boeing's 'iPlane': Two Suppliers That Stand To Benefit
Stocks/ETFs to watch: BA, NOC, PAGI
Earnings call transcript: Boeing Q2 2007

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