Boeing’s strategy facing test in slowdown.
Boeing, the largest aerospace and defense contractor in the world is facing a huge challenge against its the strategy it embarked during the 1990s to offset jetliner-sales cycles with more stable military revenue. This is mainly because military hardware spending is slowing down throughout the world and at the same time commercial orders are also taking a hit due to a steep fall in global air travellers.
The company is still going strong as it has years’ worth of orders to fill and robust profits. Jim Albaugh, chief executive of Boeing’s defense business says that the company has profited throughout the years and now it has studied how the companies have successfully navigated the last defense downturn,and he told that Boeing plans to invest and make relative acquisitions accordingly. “Jim McNerney(Boeing CEO) is not looking to me to shrink the business and to hunker down,” said Mr. Albaugh.
Boeing has largely been in the public eye ever since it acquired defence major McDonnell Douglas in 1997 and since then has come to count on roughly $32 billion a year in defense sales.
Its European EADS (European Aeronautic Defence & Space Co) rival has been following a similar path and has been aggressively expanding its defence business. “The crisis is confirming that our strategy is more valid than ever,” said EADS Chief Executive Louis Gallois on Saturday.
Taking a cue from Boeing , EADS(EADS is the parent company of Airbus) is converting its passenger planes into mid air refuelling planes. Currently both the giants are competing for a $40 billion contract from the U.S. Air Force to supply aerial refueling planes.
