Why the Air Force Is Paying Boeing $2.6 Billion for Just 2 Airplanes
Boeing (NYSE: BA) might end up selling its defense unit -- but it's not out of the defense business yet. In a huge announcement that might give a clue to the company's future, the U.S. Air Force (USAF) confirmed last week that it has awarded Boeing $2.56 billion to build for it "two operationally representative prototype E-7A weapons systems."
The contract was the single biggest award listed on the Department of Defense's daily contracts update Aug. 9 -- by a factor of four. (Second place went to a Lockheed Martin contract for Navy radar systems worth $611 million.) Even more important than the dollar value is the fact that Boeing's contract has a lot of room to grow.
Boeing's E-7A Wedgetail aircraft is designed for Airborne Early Warning and Control (AEW) of moving targets. The most famous example of this technology is the Air Force's E-3 Sentry AWACS (an acronym of "Airborne Warning and Control System"), which was first introduced in 1977, and which the Air Force intends to gradually upgrade and replace.
Source Fool.com
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