Benefits for Boeing
Boeing (BA) is expected to be one of the largest beneficiaries of Trump’s proposed increased military spending. The supplemental defense budget of $30 billion plans to buy modern warplanes, warships, and missiles. This would include a planned expenditure of $2.3 billion for 24 F/A-18 E/F Super Hornet jet fighters—ten jets more than what the US House of Representatives approved in its base spending bill on March 8, 2017.
Big spending tweets
On December 22, 2016, Trump tweeted that the US army will look at buying additional Boeing F/A-18s instead of going for the more expensive Lockheed Martin F-35. According to Trump, both jets are comparable. However, the F-35 is a stealth aircraft, which makes it difficult for enemy radar to detect, whereas the F/A-18 does not use stealth technology.
A key point for Boeing is that President Trump had previously hinted at a bigger order for Boeing. Thus, the $54 billion boost to defense spending could contain a higher budget allocation for Boeing’s fighter jets.
More funding for missiles, aircraft, and Blackhawk helicopters
Another key beneficiary will be Lockheed Martin. Lockheed’s THAAD missile has been allotted $151 million, while Sikorsky Aircraft, a Lockheed subsidiary, has received $376 million for 17 of its Blackhawk helicopters.
Boeing is the largest commercial jet manufacturer in the US and is the world’s second-largest manufacturer, behind Airbus. It’s also the second-largest defense contractor in the US, behind Lockheed Martin (LMT), and is followed by Raytheon (RTN), General Dynamics (GD), and Northrop Grumman (NOC). Boeing makes up ~5.7% of the Dow Jones Industrial Average ETF’s (DIA) portfolio.