Boeing has built a big name for itself as one of the world's largest aerospace companies. In addition to commercial jet aircraft like the much anticipated 787 Dreamliner, the company manufactures military aircraft, including the Apache, the Chinook, and the Osprey. It also produces satellites, missile defense systems, and launch systems. These products are rounded out by a portfolio of services. Major customers include the US Department of Defense and NASA. Additionally, Boeing provides airplane financing and leasing services to both commercial and military customers.
Boeing's principal operations are in the US, Canada, and Australia, with some key suppliers and subcontractors located in Europe and Japan. Boeing makes about 40% of its total revenues in the US and about 60% from international markets (primarily Europe, Asia/Pacific, and the Middle East).
Boeing operates through several segments. Boeing Commercial Airplanes designs, manufactures, and services commercial jet aircraft for both passengers and cargo. Models include the 737 narrow body, the fuel efficient 737 MAX, and the 747, 767, and 777 wide bodies. Commercial Airplanes continues to develop the 787 Dreamliner, more than 800 of which are on order by some 55 airlines around the world.
Three more segments - Boeing Military Aircraft, Network & Space Systems (N&SS), and Global Services & Support - are collectively organized under Boeing Defense, Space & Security (BDS). BDS provides design, modification, and support services for large-scale systems, including missiles, munitions, aerial refuelers, transporters, and spacecraft. BDS acts as a systems integrator on several programs, including NASA's International Space Station and Missile Defense Agency's Ground-based Midcourse Defense.
Finally, fifth segment Boeing Capital Corporation (BCC) is a financing arm that generates support revenues for the company.
Sales and Marketing
Boeing's main customer is the Department of Defense, with approximately 62% of revenues in 2015 (excluding foreign military sales through the US government). Other significant revenues were derived from NASA, international defense markets, civil markets, and the commercial satellite market.
Despite the slow economy and the late launching of its Dreamliner jet, Boeing's revenue levels reached historic heights in 2015, capping out at almost $96 billion. This represents a 6% increase when compared to 2014. Its profits fell 5% from roughly $5.5 billion in 2014 to $5.2 billion in 2015 due to a spike in cost of services and a rise in income taxes.
The historic revenue growth for 2015 was mainly due to a 10% increase in Commercial Airplanes revenues thanks to higher new airplane deliveries across all programs. Sales from the Oceana region surged by 48% from 2014 to 2015. Other markets with rising sales included Europe (3%), the Middle East (17%), and China (14%).
Being's operating cash flow has also exploded over the last four years, climbing from $4.0 billion in 2011 to nearly $9.4 billion in 2015. The rise in cash flow for 2015 was largely the result of a dip in inventory growth from its Boeing's security business, coupled with the ending of production of its C-17 aircraft.
The key component for Boeing's growth involves the much anticipated launching of its fleet of 787 Dreamliner jets. Throughout 2012 and early 2013, the jets were plagued with problems regarding the plane's battery system. The Dreamliner is the first plane in the world to use lithium-ion batteries, which are lighter, hold more power, and are able to recharge more quickly. Throughout 2013 Boeing tested out the new battery system's design in hopes of the fleet restarting commercial flights within the year.
Flight testing of the 787-9 Dreamliner variant occurred in 2014, and its first delivery was in mid-2014. The 787-10 is on plan for first delivery in 2018 and will incorporate a high degree of shared design elements and parts commonality with the 787-9 to likewise minimize risk and lower development and fleet maintenance costs. The 777X (Boeing's newest twin-engine jet, with 12% lower fuel consumption and 10% lower operating costs than its competitors) is slated for firm configuration in 2015 and first delivery in 2020.
To build out its backlog and create capacity for new orders, Boeing's plans call for five additional production rate increases. It plans for the 787 to rise to 12% per month in 2016 and to 14% per month by the end of the decade; its 737 production will increase to 47% per month in 2017 and 52% per month in 2018. In addition, it aims for production of its 767 to move from 1.5% per month to 2% per month in 2016. Overall, the company projects demand for 36,770 new airplanes over the course of the next 20 years at a total value of $5.2 trillion.
Because of cutbacks, the DoD is shifting course by shrinking ground forces and putting more emphasis on C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance), cyber and space technologies, special operations, and unmanned airborne systems (UAS). Boeing is aligning with this shift by making investments and acquisitions that enhance its capabilities in these areas.
Mergers and Acquisitions
In 2014 the company acquired Ventura Solutions, a hardware and software engineering company that provides custom products and services for government customers. Ventura will operate as part of Boeing Network & Space Systems. Also in 2014, Boeing picked up AerData Group B.V., a Netherlands-based provider of integrated software products for lease management, engine fleet planning, and records management. AerData's products will become part of Boeing Edge, an integrated suite of aviation services.