Boeing Standing By Organic Aftermarket Growth Strategy Boeing

Boeing Standing By Organic Aftermarket Growth Strategy

Full-year 2017 performance out-paced market as a whole.

Boeing's Global Services (BGS) business, fresh off a strong fourth quarter and a year-over-year expansion rate by most measures beat the aftermarket as a whole, will continue to lean primarily on organic growth in its climb to $50 billion in annual revenue, company CEO Dennis Muilenburg says.

"We still see organic growth as a primary engine here," Muilenburg told analysts Jan. 31. "And continuing to outpace the market, growing at 5% to 6% a year at the start, is a good start. We see some opportunities to accelerate that as we expand our parts business."

BGS generated $4.0 billion in fourth-quarter revenue, a 17% jump over the $3.4 billion year-earlier figure. The timing of several deals helped boost revenues; full-year growth was 5% as BGS rang up $14.6 billion in sales. The global aftermarket growth figure in 2017 was 3-5%, depending on who is crunching the numbers and what they're counting. 

Boeing executives have insisted from the outset that organic growth will drive BGS's expansion, with strategic acquisitions mixed in. Analysts have been skeptical, , but Muilenburg continues to point to opportunities such as seating, parts sales, and engineering—including cargo conversions—as areas ripe with potential. Boeing's fledgeling data services also should contribute more as time goes by, he adds.

"We’re at the early part of that digital growth," Muilenburg said. "We surpassed the $1 billion milestone just this past quarter in terms of volume in our digital business. That’s a market…that still has a lot of headroom."

Boeing will continue to invest in verticals, building on deals to develop various products, including seating, avionics, and actuation systems, which open up aftermarket possibilities.

"We don't intend to be vertical everywhere, but where we can add vertical capability that's not able for Boeing and customers and creates long-term services value, we're going to invest," he says. "In some cases, that will be done in partnership with existing suppliers. In some cases we may be looking at shifting more content between internal work and our supply base."

TAGS: Airframe
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