- Boeing received $1 billion in contracts.
- Japan ordered a pair of KC-46A tankers.
- Military derivatives platforms of commercial aircraft lifted defense orders.
- Looking for more investing ideas like this one? Get them exclusively at The Aerospace Forum. Get started today »
As the airline industry remains in a challenging spot, we are currently focusing on how the defense side of Boeing’s (BA) operations is performing, and we also have started to navigate more into coverage of the defense industry and have even developed a Defense Contracts Monitor that currently sports more than 1,250 contracts for Boeing and Lockheed Martin (NYSE: LMT) and we are preparing to add more companies to our monitor.
For investors, Boeing’s defense side became more interesting due to the significant delays on the Boeing 737 MAX recertification and reduced production and delivery rates on passenger wide body models due to COVID-19. So, for cash inflow, Boeing does depend on the defense business. Some Boeing investors have looked at contract awards to detect signs of strength, while some Boeing critiques have used the contract awards to make a point about the government keeping Boeing alive by awarding it contracts to hand over cash. I believe that the contracts awards shouldn’t be seen as a way to keep Boeing afloat as the primary way to support the defense industry has been accelerated progress payments on existing contracts.
In this report, I will have a look at the defense contracts Boeing received during the month of October. If you want to read the September report, you can find it here. This report is based on the TAF Defense Contracts Monitor, a tool that we’ve developed allowing users to slice data in any way they want to gain better insight in defense contract awards.
Boeing Defense bags military derivative aircraft orders
Figure 1: Boeing Defense contracts September 2020 (Source: TAF Defense Contracts Monitor)
After adding $2.9B in contracts in September with $550 million in funds obliged at time of award, October contracts value were lower as Boeing added $1B in contracts with $434.2 million in funds obligated on award. However, this is not a month-over-month change that tells us a lot.