The Boeing Company BA recently clinched a modification contract to provide operational and sustainment services for KC-46 aerial refueling tanker jets. The award has been provided by the Air Force Lifecycle Management Center, Wright Patterson AFB, OH.

Valued at $43.6 million, the contract is expected to be completed by Dec. 31, 2027. Work related to this deal will be carried out in McConnell Air Force Base, KS; McGuire AFB, NJ; and Travis AFB, CA.

What’s Favoring BA Stock?

Increasing defense spending by developed nations and rising geopolitical tensions, such as ongoing hostilities in the Middle East, have been driving the need for long-range combat operations. Tanker aircraft play a vital role in these operations, enabling fighter jets, bombers and surveillance aircraft to operate without fuel limitations. Resultantly, the tanker aircraft market has expanded significantly in recent times, buoyed by the growing emphasis on long-range missions, rising military expenditures by developing nations and advancements in air-to-air refueling systems.

To this end, the Mordor Intelligence firm projects a compound annual growth rate (CAGR) of 6.4% for the global tanker aircraft market from 2024 to 2029, highlighting growth opportunities for leading aerospace manufacturers like Boeing.

Notably, BA’s KC-46 Pegasus tanker remains a major player in this market. This wide-body, multi-role tanker is compatible with all U.S. allied and coalition military aircraft using international refueling protocols. Integrated with advanced data links and the Advanced Battle Management System, the KC-46 provides multi-domain connectivity, tactical situational awareness and real-time information superiority. These capabilities have significantly boosted demand for the tanker, driving strong order growth. This is further evidenced by the latest contract win.

This tanker’s solid prominence in the tanker aircraft market can be further gauged from the fact that since 2019, Boeing has delivered 89 KC-46As to the U.S. Air Force and four to the Japan Air Self-Defense Force (as of November 2024). We may expect Boeing to win more such contracts related to the production, delivery and sustainment of KC-46 tanker aircraft in the days ahead. This, in turn, should significantly bolster this jet giant’s operating results in the quarters ahead.

Opportunities for BA’s Peers

Other prominent aerospace players that have a strong presence in the tanker aircraft market and thus can be expected to gain from its expansion are discussed below:

Airbus Group EADSY: The company's A330 MRTT is an ideal replacement for aging strategic tankers. It offers enhanced range, payload and fuel offload capabilities for unparalleled mission flexibility and versatility. During a four-hour flight over 1,000 nautical miles from takeoff, it can deliver 50 tons of fuel to a variety of receivers.