05 Sep Boeing Defense Contracts: August Edition
It is important to note that while defense contracts and their prices are available to public, they are often more complex due to the use of terminologies in the contracts but also due to the fact that these contracts usually span over multiple years and do not only included the acquisition of a system, but also remanufacturing, support, engineering and risk reduction contracts. Therefore, it is more difficult to analyze Defense contracts for me.
In August, Boeing Defense contracts disclosed by the DoD reached close to $9B. This is quite a big figure and although this is the first time I am analyzing the defense contracts, I don’t expect multi-billion contracts for Boeing each month. This month’s figure was skewed by an increase of $7B for worldwide support of the C-17, this increase account for almost 80% of the contract awards. If we make the split between US and FMS, which is an abbreviation for Foreign Military Sales, I found that out of $9B in awards $1.5B can be attributed to foreign military sales (where I divided the worldwide support for the C-17 on a pro-rate basis between FMS and US customers) leaving the remaining $7.5B for the US DoD.
Quite important to note is that Boeing seems to get most of its Defense money from supporting airframes. In order to be able to continue support in the length of years it is important for Boeing to offer the most cost-efficient solutions, but also to continue competing for new programs so it can extend into the after-sales support of those programs.