Boeing’s defense business continues to work on it’s stability drive

  •  India a strong & enduring partner
  • 2Q results may look similar to 1Q

By Sangeeta Saxena

Paris. 18 June 2023. “We continue to work with our Indian partners and P8-I gives us an opportunity to do just this. As and when the requirement arises which Boeing can fulfil, it will do so always. The development on F-15 is between the two governments and I cannot comment about it. The ongoing war in Ukraine is driving investment in Europe, and Boeing is responding by ensuring it has strong supply chains and workforce to have the capacity to respond to new requirements,” responded Ted Colbert President & CEO Boeing Defense, Space & Security to ADU’s question at a media briefing with select journalists on the eve of Paris Air Show 2023.

ColbertBut the news which was the headline was Colbert’s statement, “The performance will look like the first quarter, there’s a ton of activity going on to improve our performance over the next couple of quarters in the next year or so. So, it just takes time. We can’t do it fast enough for ourselves, and obviously for our customers. I believe we’ve got all the right actions in progress. We’re still assessing where the numbers are going to fall. The unit’s profit margins for the 2Q would be in line with the 3.2% operating loss posted in the 1Q.”

He added, “there is a ton of activity to improve performance at Boeing’s defense unit but that it will take time for improvements to be seen. Boeing remains focused on starting every program the right way, including a contract structure that gives Boeing a fair shake and healthy business.”

Even though the company’s largest fixed-price contracts , the crewed Starliner spacecraft, the uncrewed MQ-25 refuelling tanker for the U.S. Navy, the KC-46 are all in the red, Colbert said the company is still making investments to boost their performance because they are important to the business. But going forward, the business has said that it wishes to stay away from these contracts in order to prevent further losses.

“There was recognition that doing big, fixed-price development programs on very, very complex capabilities or capabilities that require a lot of maturity from either an engineering or manufacturing perspective can be very, very challenging and so we are working very hard with the acquisition community and the Pentagon to be smart about every next program that we have together,” Colbert said.

 Stephanie Pope President and CEO of Boeing Global ServiceWhen it hits it hits is an old adage and at the moment seems true to the world of defence business post the pandemic and the ongoing war in Europe. Stephanie Pope President and CEO of Boeing Global Services (BGS) agreed that supply chain is a constant challenge and it’s constraints couldn’t be denied. Responding to ADU’s question on how the war in Ukraine has effected Boeing’s supply chain, she stated  “It’s not just Boeing; the entire industry is facing difficulties in the supply chain. We are devoting a lot of time to identifying our obstacles, cooperating with our suppliers, visiting them on location, and improving the way we mitigate them. She added that Boeing’s Indian  supply chain partnerships are not only strong but committed to Boeing and we hope this will help both in India and internationally.

Colbert did not mention any specific program and informed, “We will resume delivering, notwithstanding any other issue we find, in the second half of the year if we have to, and we’ve kept our commitment to the customer. So we’re working through the products that are in the factory today with an intent to get to our commitment this year.”

Losses amounting to billions of dollars have been caused by the defence unit’s numerous fixed-price development programmes, which include the KC-46, the T-7 training jet, and new Air Force One aircraft. Due to a supplier issue, deliveries of the KC-46 have been delayed, and the business has yet to deliver a revised KC-46 to the Air Force. Colbert did not provide a delivery date for its subsequent tanker.

It may be recalled that eight of the company’s divisions were consolidated into four in 2022.  Mobility, Surveillance & Bombers (responsible for bombers, refueling, surveillance, and some other civilian aircraft conversions such as the VC-25B presidential jet), Air Dominance (responsible for fighter jets, trainers and drones) , Space, Intelligence & Weapon Systems (responsible for all space-related systems, missiles and munitions, and undersea developments) and Vertical Lift. Boeing is taking steps to ensure that it’s defence business comes out of the dip.