Boeing Defense Chief Considering Bolt-on M&A to Bolster Salesby
Service-sector acquisitions are one likely target, Caret says
Planemaker is planning for eventual retirement of F/A-18, F-15
Boeing Co. is considering smaller acquisitions that it could “bolt on” to the defense division to boost revenue, particularly in the services sector, Leanne Caret, the unit’s chief executive officer, told reporters Sunday.
Caret wants to make Boeing the market leader in six areas: commercial derivatives such as its aerial refueling tanker built from modified 767 jetliners, rotor craft, autonomous vehicles, satellites, services and human space flight.
Boeing, the second-largest U.S. defense contractor, is charting strategy ahead of the eventual retirement of the F/A-18 and F-15 fighter lines next decade, its largest source of defense sales. Like peers, the U.S. planemaker is resetting priorities for a world in turmoil and with constrained government spending.
The heightened focus on the six areas doesn’t mean it’s expecting to exit the fighter-jet business, said Caret, who took charge of Boeing’s defense business four months ago.
“We are not vacating the spaces not mentioned,” she told reporters in a briefing Sunday ahead of the Farnborough International Airshow. “In parallel, we need to evolve our core business and that involves things such as fighters, other big programs that we have invested in over the years.”
Boeing plans to continue using its fighter-jet assembly lines in St. Louis to upgrade aircraft after orders fade, she said. The manufacturer anticipates selling services such as software overhauls to improve older planes.
The company is making progress with a hardware fix designed to resolve difficulties its KC-46 tanker has experienced refueling heavy aircraft such as Boeing’s C-17 cargo jets, Caret said. The glitch is the latest of several development issues that are expected to cause Boeing to miss the August 2017 delivery date for the initial 18 aircraft.
Boeing last week began flight-testing a change to the hydraulics of the boom carrying fuel from the tanker. It uses two bypass valves to regulate the flow of fuel during mid-air refueling, said Caroline Hutcheson, a Boeing spokeswoman.
“I feel very confident in this solution,” Caret said. “We have been flying, seeing positive results.”
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