Commercial, Military

As Boeing Global Services Grows, CEO Says Commercial Will Take the Lead

By Calvin Biesecker | July 12, 2018
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Boeing Global Services President and CEO Stan Deal. (Boeing)

As Boeing strives to grow its year-old services segment to $50 billion in revenue within the next nine years, Boeing Global Services CEO Stan Deal expects the commercial side of the business to pick up faster than the military.

The services segment is currently roughly evenly split between commercial and defense work but there’s “a little more upside growth in the commercial market,” Deal told Defense Daily, just ahead of the July 1 one-year anniversary Boeing Global Services. The defense market was bolstered this year with a two-year budget deal that Congress passed, but Deal said it’s “hard to predict” the trajectory of defense spending further out.

Deal pointed out that Boeing’s customers spend about 30% of their operating capital on acquisitions and the rest on the life-cycle of the platforms they acquire. Boeing Global Services was created, in large part, to put a stronger focus on its customer’s needs in the post-acquisition phase of their platforms. The company posted $14.6 billion in sales in 2017 with a revenue target of $50 billion by 2027. Boeing overall last year reported $93.4 billion in sales.

For both its defense and commercial customers, Deal said it comes down to “getting assets to be efficient at the lowest cost possible.”

The growth will be driven by a combination of organic growth strategic initiatives such as acquisitions. In May, Boeing announced a $4.3 billion acquisition of KLX, Inc., which strengthens Global Services’ capabilities in the distribution of parts and chemicals. KLX is mostly a commercial play but does provide some additional defense work.

In June, Boeing entered a joint venture with France’s Safran Group to jointly design, build and service auxiliary power units, which are used to start an aircraft’s main engines and power aircraft systems. The arrangement with Safran is also initially targeted at commercial aircraft but Deal said it has the potential to expand into military aircraft.

Boeing Global Services is interested in a joint venture for aircraft seating and is also interested in aircraft avionics as the company continues to grow its portfolio.

Deal outlined four capabilities his group brings to market including digital innovations such as data analytics; supply chain solutions, which are bolstered by the KLX acquisition; engineering maintenance and modifications; and training and professional services. The primary market areas that Deal is focused on are the U.S. government, commercial, business and general aviation and international governments.

Boeing will be exhibiting at the Farnborough Air Show at chalet B6, cargo village 6015, P7 and cargo village 6130, OE P7.

This was originally published at Defense Daily.

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