What Boeing-Saudi Latest Tie-Up Means for US Defense Majors - April 4, 2018

The Boeing Company (BA - Free Report) on Mar 30, 2018 announced that it has signed a Memorandum of Agreement (MoA) with Saudi Arabian Military Industries (“SAMI”) to form a new Joint Venture ("JV") worth $450 million. The JV will help to localize more than 55% of the maintenance, repair and overhaul (“MRO”) services for fixed and rotary-wing military jets in Saudi Arabia.

Interestingly, this tie-up got finalized a week after President Trump praised Saudi Arabia for being a ‘big purchaser’ of American weaponries, during Saudi crown prince Mohammad Bin Salman’s visit to the White House. The latest JV further strengthens the relationship between the oil-rich Saudi Arabia and largest weapon exporter America.

Strengthening Boeing-Saudi Arabia Relationship

Over the years, Boeing has developed a genial relationship with the Kingdom of Saudi Arabia ("KSA"). The former U.S. President Roosevelt’s gifting of a DC-3 Dakota jet to the Saudi king in 1945 enabled the aircraft major to initiate commercial business in the nation. The company’s defense unit started doing business with the nation following Royal Saudi Air Force’s (“RSAF”) purchase of F-15C/D fleet in 1978. Notably, this remains the mainstay of KSA’s air defense till date.

Since then, Boeing has been winning a number of contracts from the KSA for advanced military weaponries. Of the latest notable deals, in August 2017, the company won a $223-million contract for supplying eight CH-47F new helicopters to support the Royal Saudi Lan....

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