What If Boeing (BA) Loses $40 Billion Military Contract

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The US military’s aerial refueling tanker contract is up for bid. The deal is worth $40 billion and involves building 179 planes. Boeing (NYSE: BA) and its investors are counting on the deal. But, EADS, parent of Airbus, and Northrop Grumman (NYSE: NOC) have teamed up to try to get the business.

According to the AP, with more tankers to be replaced in the next several years "s much as $100 billion over the next 30 years is at stake, says Loren Thompson, a defense industry analyst with Lexington Institute, a policy think tank."

If Boeing does not win the contract, its shareholders face a potential big drop in company’s shares. Boeing’s stock have already fallen from a 52-week high of $107.83 to $83.04. Much of the drop is due to delays in the launch of the company’s new 787.

Another piece of bad news and the shares could end up back below $75, near their 52-week low.

Douglas A. McIntyre