Defense companies worldwide are seeking to expand in security, surveillance and intelligence to compensate for flat conventional weapons spending and changes in perceived threats. Boeing plans to announce a fourth acquisition in the intelligence sector at the Paris Airshow in the midst of an economic crisis that is crippling the industry.
Boeing defense chief Jim Albaugh sat down with journalists in the company’s office in the French capital and shrugged off suggestions that his job could be on the line.
Boeing’s defense unit was hit hard by proposed Pentagon program cuts announced in April.
Boeing had spent a decade as the second- largest U.S. defense contractor, behind only Lockheed Martin. But in 2008, it lost that status as Northrop Grumman’s sales of almost $34 billion pushed Boeing, with $32 billion in defense sale, into third place.
Since acquiring defense giant McDonnell Douglas in 1997, Boeing has come to count on roughly $32 billion a year in defense sales.
Boeing has focused recently on growing through acquisitions in promising areas such as cyber-security and unmanned aerial vehicles.
Boeing’s biggest rival, Airbus parent European Aeronautic Defence & Space Co. has followed the same tack by aggressively expanding its defense business to balance the cyclicality at Airbus.
The long-anticipated first flight of Boeing Co.’s (BA) new 787 won’t take place during the Paris Air Show, Scott Carson, head of Boeing’s commercial airplanes unit, told reporters at a presentation at the annual aerospace industry gathering.
Boeing Co.commercial airplane Chief Executive Scott Carson said Monday that the company’s commercial aircraft unit continues to run at the right production rate following announced cuts to its 777 program and ramp-up delays for its 767 and 747-8 jets.
Speaking at the Paris Air Show, Carson said the rapid deterioration in air-freight demand was the main driver behind the production cuts, announced in April.
Further deterioration in freight could therefore harbor a risk to the company’s delivery schedule next year, and Carson said he is watching carefully as businesses begin to rebuild their inventory and how they are choosing to ship their freight, whether by truck train or air. On the passenger side, Carson said it looks like the industry is “bouncing along the bottom” after a steep falloff in demand — a good sign.
Furthermore, he expects capital to become more available to airlines by the end of year, which will help in financing the new aircraft. Regarding the 787, Carson said the new plane will be up in the air before the end of June, and that the first customers for the jet are well financed by groups other than Boeing.
Most of the business deals that move forward in Paris could be on the military side of aviation. Hot defense topics at the show include a potential big fighter-jet order from India, the proliferation of unmanned flying machines and the ongoing battle over the U.S. Air Force refueling-tanker contract.
The big weapons manufacturers are reaching new altitudes, even in a floundering global economy. “It’s a great time to be in the fighter business” says Bob Gower, the head of Boeing’s F-18 fighter plane program.
Brazil, India, United Arab Emirates are in the market for new fighter planes now. And Japan, Saudi Arabia, South Korea, Qatar and Kuwait all have plans to buy in the next few years.
Boeing Creates Unmanned Airborne Systems Division
Boeing on June 15 announced the formation of an Unmanned Airborne Systems (UAS) division within its defense and space business unit. The new division will lead the company’s sustained pursuit and execution of UAS business and the transition of new products from research to production.
The UAS division will assume program management responsibility for the A160T Hummingbird, Unmanned Little Bird and SolarEagle (Vulture) programs. Insitu Inc., a wholly owned Boeing subsidiary that manufactures the ScanEagle and Integrator unmanned aerial systems, will report to the new division.
Speaking at the Paris Air Show, Jim Albaugh, president and CEO of Boeing Integrated Defense Systems (IDS), said Boeing’s experience in developing and manufacturing unmanned systems has resulted in “a broad portfolio of unmanned systems in technology development and current service applications, spanning a number of critical mission types.”
“This new division establishes a single leadership team focused on implementing a common strategy for unmanned airborne systems and services, and ensures access to resources and capabilities from across IDS,” Albaugh added.
Boeing Acquisition of eXMeritus, Inc. Enhances Capabilities in Cyber and Intelligence Markets
The Boeing Company (NYSE: BA) today announced it has signed an agreement to acquire eXMeritus, Inc., a Fairfax, Va.-based company that provides hardware and software to federal government and law enforcement organizations for sharing information securely across classified and unclassified networks and systems.
eXMeritus’ products are certified and accredited by the U.S. government to perform this function on its most trusted systems. The decision to buy eXMeritus complements last year’s acquisitions of Digital Receiver Technology, Ravenwing and Kestrel Enterprises. These acquisitions are key moves in the company’s strategy to expand its presence in the cyber and intelligence markets.
“Our military and government customers have said that protecting vital information networks against cyber attacks is one of the nation’s highest priorities, and Boeing is responding to the call,” said Boeing Integrated Defense Systems President and CEO Jim Albaugh. “The addition of eXMeritus to our team is a strong enhancement to the Boeing capabilities developed through years of experience on secure networks for some of the most complex systems in national security today.”
Terms of the transaction are not being disclosed. This transaction, anticipated to close by the end of June, does not affect Boeing’s financial guidance. eXMeritus will operate within Boeing Integrated Defense Systems’ Network and Space Systems unit.
Founded in 2000, eXMeritus has fewer than 30 employees.