L3Harris Steps Into Boeing’s Footsteps: How the Qatar Jet Deal Positions the Defense Giant for Growth
28min read The U.S. government’s decision to fast-track an interim Air Force One by retrofitting a Qatari-owned boeing 747-8 has thrust L3Harris Technologies (NYSE: LHX) into the spotlight as a key beneficiary of Boeing’s (NYSE: BA) stalled $3.9 billion program. The move underscores a growing trend in defense procurement: subcontractors like L3Harris are increasingly stepping in to address critical gaps left by delayed or over-budget prime contractors. For investors, the Qatar jet deal is more than a temporary fix—it signals a strategic opportunity for L3Harris to expand its role in high-value aircraft modification and communication systems, even as Boeing’s struggles weigh on its own prospects.
Boeing’s Delays Create an Opening
Boeing’s Air Force One program, which began in 2016, has become a poster child for the risks of overly ambitious defense projects. Originally slated to deliver two custom-built 747-8s by 2024, the program now faces delays until at least 2035 due to supply chain bottlenecks, technical hurdles (e.g., wiring complexities), and cost overruns exceeding $2 billion. With the current Air Force One fleet aging—two 1990s-era 747-200s are the only operational aircraft—the White House sought an interim solution.
Enter L3Harris, a subcontractor on Boeing’s original program, which now leads the retrofit of Qatar’s 13-year-old 747-8. The $24.3 million contract (FA2541-25-C-B038), awarded in 2025, focuses on installing high-capacity satellite communications systems to meet presidential aircraft standards. While this interim jet lacks advanced security features of Boeing’s planned aircraft, it addresses the immediate need for a third backup plane by fall 2025.
Why L3Harris Wins Here—and What It Means for Investors
L3Harris’s role highlights its niche expertise in specialized avionics and communication systems, a segment where Boeing has struggled to deliver. The Qatar deal is small relative to Boeing’s $3.9 billion contract, but it exemplifies L3Harris’s ability to capitalize on prime contractors’ missteps.
Key data points:
- L3Harris’s backlog: The company’s total backlog stood at $18.7 billion in Q1 2024, with defense electronics and aviation systems accounting for 60% of revenue. The Qatar deal adds to this pipeline.
- Margin resilience: L3Harris’s operating margin (11.3%) outperforms Boeing’s (5.6%) due to its focus on higher-margin subsystems rather than full aircraft production.
- Qatar’s broader contracts: Beyond Air Force One, Qatar has awarded L3Harris a $2 billion contract to upgrade its Boeing aircraft with advanced communication and cybersecurity systems, suggesting a long-term partnership.
Risks and Considerations
While L3Harris’s role in the interim Air Force One is a win, investors must weigh broader industry headwinds:
1. Boeing’s future: If Boeing’s program is canceled entirely, L3Harris could inherit a larger role, but if Boeing recovers, competition may intensify.
2. Political risk: The interim jet’s “patriotic” paint scheme and Qatar’s geopolitical ties could spark scrutiny, though L3Harris’s technical execution is the priority.
3. Defense spending trends: U.S. defense budgets remain robust, with 2025 allocations for aircraft modernization at $32 billion—L3Harris is well-positioned to capture a share.
Conclusion: L3Harris’s Strategic Advantage
The Qatar jet deal is a microcosm of L3Harris’s broader strategy: leveraging niche expertise to secure high-margin, government-backed contracts while prime contractors falter. With Boeing’s Air Force One program likely to remain under pressure for years, L3Harris’s ability to deliver critical subsystems quickly and cost-effectively positions it to win follow-on work.
Investors should note that L3Harris’s stock (LHX) has outperformed Boeing’s by +28% over the past five years, despite its smaller size. Its valuation—trading at 18x forward earnings compared to Boeing’s 15x—reflects this premium. However, the $2 billion Qatar contract and potential Air Force One follow-ons could justify further upside.
In a sector where execution matters more than ambition, L3Harris is proving that agility and specialization can trump scale. For now, the skies look clear for this defense giant.
