Boeing Shares Climb After Winning $20 Billion Contract to Develop 6th-Generation US Navy Fighter

Boeing shares climbed 2% during Wednesday premarket hours after the US Navy awarded the aerospace giant a contract worth more than $20 billion to develop its sixth-generation F/A-XX fighter, potentially offering a considerable boost to the company's defence business.

The contract covers the full-scale development phase of the Navy's F/A-XX Strike Fighter under the Next Generation Air Dominance (NGAD) programme. It includes multiple test aircraft for ground, airworthiness, systems, and weapons integration testing.

RBC Capital Markets analyst Ken Herbert described the award as a 'near-complete reversal' of Boeing's defence trajectory, while a report on RBC's analysis said the F-47 and F/A-XX programmes could provide Boeing with two separate long-term revenue streams.

Even Stacie Pettyjohn, director of the defence programme at the Center for a New American Security, echoed Herbert's sentiment, describing the development as a 'complete pendulum swing' for Boeing.'

Boeing's Fighter to Replace Super Hornets

Following the contract award, Boeing will deliver the new platform to augment and eventually replace the Navy's legacy F/A-18E/F Super Hornets and EA-18G Growlers beginning in the 2030s.

The F/A-XX will operate alongside the F-35C, adding another advanced aircraft to the Navy's future carrier-based fleet.

The programme offers Boeing a long-term role in the development of the Navy's future air combat capabilities, with the company set to work on a fighter intended to serve for decades, according to a press release.

F/A-XX to Extend Carrier Air Power

The F/A-XX will provide advanced carrier-based power projection, extending the range of US Navy carriers.

The fighter will also be interoperable with manned and unmanned platforms, including Collaborative Combat Aircraft (CCA), and is designed to increase the capability of every CCA it teams with.

'The F/A-XX is a critical pillar in our commitment to maintaining peace through strength. F/A-XX will dominate contested airspace, extend operational reach, and deliver a decisive combat advantage for the warfighter,' said Michael Duffey, Under Secretary of War for Acquisition and Sustainment.

Duffey described the platform as a vital investment in US national security and long-term air combat capabilities. He said the US is joining forces with Boeing to field the capabilities rapidly, providing warfighters with highly networked systems designed to deter aggression, project power, and secure air superiority.

'This achievement marks a new era for the US Navy. The Sixth-Generation fighter is a generational leap in air superiority and will provide the world's best aviators with unparalleled capabilities to fight, win, and come home safe,' said acting Secretary of the Navy Hung Cao.

Defence Win Turn Market Focus on Boeing

The F/A-XX award offers Boeing investors another major milestone to consider as the market assesses Boeing's wider business outlook amid ongoing pressure on the stock price.

The new programme places the company at the centre of a major US Navy modernisation effort and gives its defence operations a long-term boost.

TD Cowen analyst Roman Schweizer said investors will focus on how Boeing priced the programme and the contract structure, given the company's history with cost overruns on big deals. The analyst also opined that the award suggests the Navy placed considerable weight on Boeing's manufacturing capacity and ability to deliver at scale.

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