For one of the largest global aircraft manufacturers, the past year has not been memorable. But things are definitely looking up as shares of Boeing Co. (BA, Financial) touched a new 52-week high of $149.68 on Friday which is a 22% increase over the past year’s low point. The company also recorded good performance in its fourth-quarter 2014 results. For the aviation and defense systems manufacturing giant, 2015 seems to hold good as lucrative deals are already being signed. If one goes by the hints of what is to come, the year has started with a bang for the company.
The shares reflect the high-spirits of investors who are confident of the company charting a continued growth in 2015. If the company delivers between 750 and 755 commercial jetliners in 2015, Boeing would be in a strong position to beat European rival Airbus Group NV (EADSY, Financial) for the fourth year in a row. In its boom for commercial crafts, Wichita based Spirit Aero Systems, Inc. (SPR, Financial) which builds important pieces of Boeing aircraft is also seeing record performance in the market where stocks were trading at a high on Friday at $49.27. The more deals that Boeing signs, the better Spirit’s evaluation will be.
Big ticket deals
It’s just been two months and Boeing as well as General Dynamics Corp. (GD, Financial) has already managed to land some big ticket programs from the Pentagon’s funding list. On Friday, the Pentagon declared that Boeing had won a $403 million contract with the government of Japan to upgrade four 767-based airborne warning and control aircraft. The contract however is not a fresh deal but a modification of an earlier one will run through June 30, 2020. It includes upgrades of several ground and air defence mechanisms. However, that one deal that could send the stocks soaring but was stuck in bureaucratic red-tape may finally see the light of the day. Following the Japan deal, Boeing signed a $648 million contract with the UK government on February 18. They will provide service support for Britain’s Chinook helicopter fleet as part of defence investments. The five-year contract includes maintenance services and technical support, which will now sustain over 400 jobs.
A Jordanian boost?
A few weeks back, Jordan’s King Abdullah had made a vocal appeal to America to support the nation in its fight against the Islamic State. The terror organisation has led multiple attacks, and also posted videos of its inhuman executions. One such video was that of a Jordanian pilot who was burnt alive in a cage, which had triggered a huge public outcry. However, in its fight against ISIS, the kingdom is facing a fast depleting arsenal and has requested munitions from the US, which include precision-guided arms, aircraft parts and additional night vision equipment.
Although not officially declared yet, US officials have hinted at the possibility of US consenting to Jordan’s request. King Abdullah is trying to bolster the kingdom’s military capability in its fight against ISIS and has renewed bombing raids. But the kingdom could struggle to sustain the intensity of the air strikes. Following his appeal, Republican Senator John McCain has asked the Obama administration to process Jordan's requests "with a sense of urgency reflecting the pace of events."
According to US sources, Jordan has requested Joint Direct Attack Munitions (JDAMs) which are precision-guided systems based on global position system (GPS) technology. These JDAMs, manufactured by Boeing, bring down civilian casualties by hitting the targeted area with precision. When the deal comes through, the company is set to deliver a big order which will strengthen its position in the defence market at a global level.
