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Will MRO + Boeing = $50 billion?

OEM sets its sights on greater aftermarket incursion with formal announcement of new services business.

When it comes to MRO, Boeing is thinking big--really big. The company plans to use the Paris air show to set the stage of its July 1 stand up of new Global Services division that aims to capture a much larger share of the services work on Boeing and other aircraft.

How much? The air framer is aiming for the new unit to be generating $50 billion annually within 5-10 years, a figure that equals roughly half of Boeing’s current sales. It is, in the words of CEO Dennis Muilenburg, “a big, audacious growth target, but we can see our way through to achieving that.”

Boeing Global Services will merge the company’s commercial and defense services portfolios. Stan Deal, the president and CEO of the new Dallas-based business, says Boeing currently has a 7% aftermarket share on commercial aircraft in service and 9% on military aircraft. His boss, Muilenburg, wants to see that share mushroom. “There’s nobody with a foothold in both the government sector and the commercial sector like Boeing,” Deal said in an interview. “I’d like to increase our win rate by 100%.”

And that goal is not limited just to Boeing aircraft. “We already do a number of things on Airbus airplanes and Lockheed airplanes, and we plan to do more,” Deal says.

Deal says one of the keys to success will be a shift in culture. Boeing Global Services must get away from the company’s heritage as a heavy industrial manufacturer to provide faster, competitively priced services.

In addition to gaining more business from current capabilities, Deal expects to bolster growth with selective acquisitions and the launch of new services, such as 737BCF and Jeppesen FliteDeck Pro 3.0. Boeing Global Services will launch with four core service capabilities: supply chain; engineering, modifications and MRO; digital software; and training/professional services.

Those four service capabilities will in turn be distributed across four channels: commercial, business and general aviation, U.S. government and international governments.

“We’re in the midst of a reorganization,” Deal says, adding that more details about the unit’s structure should be announced in the third quarter.  While the majority of military services will transfer to the new entity, some pieces, such as embedded engineering teams and modernizing current platforms, will remain under Boeing Defense, Space & Security President and CEO Leanne Caret.

Unlike its Commercial Airplanes unit, where Boeing faces a single primary competitor in Airbus, the services arena is much more fragmented. Competitors include Lockheed, L3 Technologies, Airbus and Lufthansa Technik, as well as a lot of smaller operators. A number of “non-traditional” players are also coming into the market, Deal says. 

As he stands up its new organization, Deal wants a “service champion culture” that also incubates innovation. “Last year we produced 17 new services,” he says. “We’d [ultimately] like to innovate 100 ideas a year and take them to market.”

TAGS: Airframe
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