Quick Summary
- Boeing shares gained 2% Wednesday following a Pentagon contract award exceeding $20 billion.
- The contract involves the Navy’s next-generation F/A-XX Strike Fighter development.
- Northrop Grumman was defeated in the competition for this defense award.
- This victory comes after Boeing secured the Air Force’s F-47 fighter jet deal in 2025.
- Morgan Stanley highlighted Boeing as a tactical opportunity before an important labor decision.
Shares of Boeing (BA) advanced 2% during Wednesday’s trading session. The rally followed the Pentagon’s announcement selecting Boeing ahead of Northrop Grumman (NOC) for a substantial Navy contract.
The contract focuses on developing the sixth-generation F/A-XX Strike Fighter. Pentagon officials confirmed the complete development phase carries a value surpassing $20 billion.
This marks Boeing’s second major fighter aircraft contract in less than 24 months. The company secured the Air Force’s F-47 program in March 2025.
The combination of these contracts positions Boeing as the primary developer of advanced fighter platforms for both naval and air force operations. Such a dominant position is uncommon for a single defense contractor.
Industry observers weren’t surprised by the decision. BNP Paribas aerospace and defense analyst Matthew Akers noted that market expectations favored Boeing following last year’s F-47 contract award.
Contract implications for Boeing’s production facilities
This award reinforces Boeing’s defense division during a challenging period for its commercial aviation segment. The contract particularly benefits the company’s St. Louis manufacturing operations.
The aerospace giant is expanding production capabilities at that location. Company officials have indicated the upgraded facility can simultaneously accommodate several advanced aircraft programs.
Despite this positive news, Boeing stock remains down 13% for the current year. The shares dropped 10% in September alone, driven by a software defect, 737 MAX 10 certification hurdles, and approaching labor contract expiration.
Morgan Stanley addressed these challenges in a Tuesday research note. The investment firm maintained its Equal-weight rating alongside a $250 price objective for Boeing.
This target represents approximately 33% potential upside from the current trading level around $187. The bank identified the period before the Oct. 1 labor decision as potentially advantageous for tactical positioning.
Critical labor decision approaching
The Society of Professional Engineering Employees in Aerospace serves as the representative body for Boeing’s technical and engineering workforce. The voting period for a revised contract proposal concludes Oct. 1 at noon Pacific time, with outcome announcements expected later that day.
Contract approval would eliminate a significant near-term uncertainty for Boeing. Rejection would establish Oct. 7 as the earliest potential strike commencement date, though a negative vote doesn’t automatically trigger work stoppage.
Historical precedent provides useful perspective. SPEEA has conducted one complete strike against Boeingāa 40-day action in 2000āplus a single-day walkout in 1993.
This contrasts sharply with the IAM machinists union’s record of seven strikes against Boeing spanning 1948 to 2008. The bargaining councils representing SPEEA membership are currently advocating for contract acceptance.
Meanwhile, Boeing’s 737 MAX 10 program confronts separate challenges. FAA statements have indicated potential certification postponements linked to a software problem already impacting MAX 7 deliveries.
According to Cirium data, the MAX 10 represents approximately 24% to 25% of Boeing’s projected 2027 order book. Potential disruption could be mitigated if customers switch MAX 10 orders to MAX 8 or MAX 9 configurations.
Boeing’s second-quarter earnings, announced July 28, revealed $24.6 billion in revenue based on 171 commercial aircraft deliveries. The company reported a GAAP loss of $0.67 per share, alongside quarterly free cash flow reaching $0.6 billion.
Boeing’s overall backlog reached an unprecedented $715 billion, encompassing over 6,200 commercial aircraft orders. The Oct. 1 labor vote outcome should be available that afternoon.
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