Boeing resuming defense programs production shows company’s priorities

Following the news that Boeing has reopened part of its Puget Sound (WA) production lines;

Nicolas Jouan, Aerospace and Defense Analyst at GlobalData, a leading data and analytics company, offers his view on Boeing’s decision:

“Defense has become a new lifeline for Boeing, which has been badly impacted by the COVID-19 pandemic and the commercial aviation crisis. Around 2,500 personnel have been sent back to work at Renton and Moses Lake facilities – the former of which includes final assembly lines of P-8 Poseidon and KC-46 Pegasus, while the latter provides maintenance to the grounded B737 and its modified P-8 military version.

“Boeing had a difficult start this year, suspending dividends on 20 March and seeing a single cancellation of 75 B737 MAX from leasing company Avolon in early April. Boeing is confronted to the double hurdle of the ongoing B737 grounding amid a generally sluggish commercial aviation market that was further weakened by the COVID-19 crisis. The company is, therefore, trying to shelter its defense and aerospace business, which represented 34% of revenue in 2019 against 42% for commercial airplanes, and could very well become the company’s main source of revenues this year.

“Boeing has advantage over Airbus, which is far more reliant on its commercial aerospace activities, representing 71% of its revenue in 2019. Reopening P-8 and KC-46 production lines proves that Boeing has decided to bet on more secure streams of cash flow.”

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