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.

Is Boeing Getting a Boon from Trump’s Proposed Budget?

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.

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