The U.S. Air Force on Monday awarded Boeing Co. (NYSE: BA) a contract valued at a total of $2.9 billion for a fourth production lot of 18 additional KC-46A tankers. The award lifts the number of tanker orders to 52.
Boeing won the first two production lots, for seven and 12 planes, in 2016. A third production lot for 15 tankers was awarded in January 2017.
The KC-46A won Federal Aviation Administration (FAA) certification last week, with final military certification still to come. Boeing is scheduled to deliver the first airplanes late in October.
The company currently has 36 of the new tankers in flight testing, temporary storage, having military equipment installed or in final assembly, according to a report from Leeham News.
Following a contract bidding process that started in 2001 and that was twice restarted following protests from Boeing, which lost the first one, and Airbus, which lost the second one, Boeing won a fixed-price bid in 2011 for a total of 179 new tankers.
The win did not come without its own troubles. So far Boeing has written down some $2 billion in cost overruns, an amount it expects to earn back with long-term maintenance and repair contracts plus future upgrades. The Air Force also is likely to increase the number of planes beyond the initial 179.
The KC-46A is built on the airframe of the commercial 767-200ER and Boeing is expected to raise the production rate on the planes from a current 2.5 per month to 3.0 per month due more to demand for 767-based freighters than for the new tankers.
In addition to 18 more planes, the Air Force contract awarded Monday includes two spare engines, five wing refueling pod kits, initial spares and support equipment. The 18 planes are expected to be completed by January 2022.
Boeing stock closed down less than 1% at $338.82 early Tuesday. The stock’s 52-week trading range is $237.09 to $374.48, and the consensus price target is $411.48.
Take Charge of Your Retirement In Just A Few Minutes (Sponsor)
Retirement planning doesn’t have to feel overwhelming. The key is finding expert guidance—and SmartAsset’s made it easier than ever for you to connect with a vetted financial advisor.
Here’s how it works:
- Answer a Few Simple Questions. Tell us a bit about your goals and preferences—it only takes a few minutes!
- Get Matched with Vetted Advisors Our smart tool matches you with up to three pre-screened, vetted advisors who serve your area and are held to a fiduciary standard to act in your best interests. Click here to begin
- Choose Your Fit Review their profiles, schedule an introductory call (or meet in person), and select the advisor who feel is right for you.
Why wait? Start building the retirement you’ve always dreamed of. Click here to get started today!
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.