FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Atlas
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
1990
1990 - 0861.PDF
miles! growth will be. If we miss that by just a slight amount, it has a major impact on numbers of aeroplanes." Boeing expects air traffic growth to stay ahead of gross national product (GNP) in most markets, however, and Shrontz adds: "If you look at the areas of the world which are developing today, the opportunity for growth in air travel with just a little bit more economic gain is very substantial. I don't think we are in a market yet around the world which you could truly describe as mature to the point where the growth is strictly limited by GNP and population." Boeing's list of key potential 777 launch customers includes American, Delta, United, JAL, All Nippon and British Airways. While Shrontz will not speculate on a probable launch date, he says: "Our timetable is such that we would like to have a configuration finalised by mid-year. We have had the airlines who might be interested in it together on several occasions, and the reaction has been good. I think we are gaining on refining the configuration, and clearly that is the first step in launching the programme." DEFENCE SHAKE-OUT The uncertainties of the commercial market place pale beside the "shake-out" in the defence business which is expected over the next two years, as the impact of the US budget deficit and the virtual breakup of the Warsaw Pact are reflected in reduced defence expenditure. Boeing is among the most vul nerable of the major contractors, being in volved in two programmes (Advanced Tacti cal Fighter (ATF) and B-2) included in the current review of the Pentagon's four largest aircraft projects, Three others—the V-22 tiltrotor, the US Army's Light Helicopter (LH, formerly LHX) and NASA's Space Station Freedom art also vulnerable in varying de grees to funding cutbacks. Boeing has amalgamated its defence and space businesses into one organisation in a bid to improve efficiency. Shrontz concedes: "If we conclude at any point that the future will continue to be as bleak as 1989 proved .to be as far as profitability is concerned, con tinuing in that business would not make any sense." Shrontz spent four years at the Pentagon as assistant secretary of the Air Force and assistant secretary of defence, and says: "Part of the problem last year, of course, was general problem programmes, and while we are not in any way suggesting that we are out of the woods on all of those, we see a much brighter future than we have had recently". Boeing is a substantial subcontractor on the B-2, which suffered major holdups during development, including a redesign of the wing, and is teamed with Bell Helicopter on the V-22 tiltrotor. Boeing is also teamed with Lockheed and General Dynamics on the YF-22 ATF candi date, and with Sikorsky on the First Team LH candidate. All four major programmes could FLIGHT INTERNATIONAL 21-27 March 1990 conceivably be cancelled or drastically scaled back over the next few months, and Shrontz says: "That would have a very negative and precipitous impact on us. It would affect both our helicopter operation in Philadelphia, where we would hope to build some day both the V-22 and LHX, and it would clearly have an impact here in Seattle, where we have "If we had a major economic downturn, it would have a major effect on our order backlog." wmmmmAemxmmmmimmmmammm significant B-2 business, and hope for the Advanced Tactical Fighter. The other side of the coin is that, if these programmes were to go ahead, we think there are still some long- term growth opportunities in defence. "We remain optimistic that we are in a winning competition on the Advanced Tacti cal Fighter, and the LHX certainly represents a significant long-term "opportunity for us. We are also involved in programmes which are not on this list which I think are in areas where there will be continuing demand, notwithstanding the general defence turn down—anti-submarine warfare, surveillance of one form or another involving AWACS and other programmes." s Boeing's other existing defence projects include the E-3 AWACS (airborne warning and command system) for the UK Royal Air' Force and French Air Force, the Update IV mission avionics package for Lockheed's P-7 anti-submarine warfare patrol aircraft, the US Navy's E-6 Tacamo airborne communica tions aircraft, Avenger fire units for the US Army's forward-area air-defence system, the SRAM-T short-range attack missile, the FOG-M fibre-optic-guided missile and the Condor unmanned surveillance platform. Boeing's former Miliary Airplanes Comp any in Wichita is already winding down its defence business, with several programmes either completed or near completion. Boeing will offset the loss of this business with an increase in commercial subcontracting from Seattle, and will build major sections of the 777 in Wichita. Shrontz says: "The plan is to use some of the Wichita engineering capability to help with the design, and certainly significant parts of the aeroplane will be built there". Another vulnerable location is Philadelphia, which could lose V-22 and LH, and be left with just the MH-47E special-operations Chi- nooks, the CH-47D modernisation pro gramme and international Chinook orders. Shrontz says that the future of the helicop ter company could hinge on ". . . what pro curements would be made if both the V-22 and the LHX did not materialise. He adds: "It seems pretty obvious to us, and I think to the services, that they would be forced not just to modernise other equipment,'but to buy new equipment. The Marines have talked about potentially buying more CH-46 helicopters, and I really believe as we see it today that we could survive [the loss of V-22 and LHXJ." ACQUISITION STRATEGY With the forecast decline of the company's defence business, Boeing's strategy of retain ing a balanced base may lead it to look for further acquisitions. Shrontz says: "Our ob jective today is to stay within the three product sectors that we are engaged in— commercial aeroplanes, defence and space and computer services. "If one of those, say defence and space, was no longer attractive, then we would have to look at some other options. But I think that we would probably look at them in a very narrow sense, because our interest is truly aerospace, and I don't propose that we go out and become a conglomerate just to balance the cycles that exist. But we clearly would look around for other related opportunities, although I can't honestly say today that we have done our homework for that kind of disaster scenario." Shrontz estimates that defence and space will still account for around 30% of the company's sales by the end of the decade, with increased growth for the commercial aircraft company and the computer services subsidiary. He adds: "This is a very unpre dictable time. We have always had difficulty estimating with any preciseness the aero plane market, and now we are having diffi culty estimating with any preciseness the defence and space markets. '• "The important thing is that we remain flexible, and do the kind of planning that will allow us to roll with the cyclical business we are in. The one thing we can be sure of is we will be wrong. I just don't know how wrong, or on which side of the equation." Q 29
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
