McAleese & Associates: Boeing ‘Self-Funds’ R&D Work on Some Defense Programs

Jim McAleese

A new report by consulting firm McAleese & Associates says Boeing (NYSE: BA) has begun to “self-fund” research and development work on some Defense Department programs as it aims to win new contract opportunities.

Jim McAleese, founder and principal at McAleese & Associates, wrote that one of those opportunities is the U.S. Air Force’s potential $63B Ground Based Strategic Deterrent program that Boeing CEO Dennis Muilenburg considers as the next “strategic-franchise-pursuit” of the company’s defense, space and security business.

Boeing said in its third-quarter earnings call on Wednesday, Oct. 24, that it considers the T-X trainer program as a “$40B multi-decade franchise” with international market opportunity for up to 2.6K aircraft, sustainment and training support.

The MQ-25 carrier-based unmanned aircraft program is a potential “$20B market opportunity” for approximately 200 planes.

The company noted that it has two production-ready T-X jets and an MQ-25 demonstrator aircraft that is being prepared for its initial flight.

Boeing won the potential $9.2B T-X trainer aircraft contract in September, nearly a month after it secured an $805M contract for the U.S. Navy’s MQ-25 carrier-based refueling drones.

The Chicago-based defense contractor reported $25B in sales for Q3 2018, up 4 percent from the same period last year, according to the report.

Boeing saw its cash flow climb 34 percent to $4.6B and recorded a 37 percent increase in Q3 earnings per share for 2018.

The company’s defense business posted a 31 percent rise in total backlog to $58B in Q3 2018, which McAleese associated with T-X, MQ-25 and UH-1N Huey aircraft programs.

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