Boeing is playing down the possibility of cutting programmes in its get-tough approach to what it had labelled "value destroying" product lines. The US giant's chief financial officer, Debby Hopkins, says several programmes previously in doubt are "operating above the line", and are off the at-risk list.
Hopkins will not reveal, however, which lines have shown improvement, or explain how the turnaround was achieved in the few months since the initiative was launched at the end of February.
At the time of that launch, the plan was seen as a "firefighting" scheme aimed at increasing Boeing's profitability by weeding out, selling or cancelling value-destroying programmes by the end of this year. About nine of 40 major business lines had been defined as on course for break-even at best, with seven flagged as set to produce negative results. Out of $13 billion invested across the lines, Hopkins said that $1.3 billion was "really destroying value" and would receive "immediate attention".
Despite these warnings, Hopkins maintains that February's initiative - which also saw chief executive Phil Condit warn that "there are no sacred cows" - was intended to be part of Boeing's new "managing for value" business model, and that it never carried the threat of deadlines for assessing programme viability.
While Hopkins argues that there has been no U-turn or softening of the Boeing line, it seems that some products once facing the axe could be safe. The ultra-long range 777X study, for example, has moved ahead, with General Electric selected as sole engine supplier, while Boeing continues to push the 717. In April, Condit said he was "not sure" whether the 717 could be built "at a price that allows you to make money", but, Hopkins says, he has "gained more confidence because of seeing more interest in the aeroplane".
Hopkins, speaking in London, also stressed that Boeing does not seek to retreat to core activities, but plans to expand its business into new, profit-generating areas. Of Boeing's three divisions, she says Space and Communications will expand hugely, and that multimedia and mobile satellite services are defined as key growth areas.
Together with president Harry Stonecipher, Hopkins and Condit are exploring the "critical" consideration of "where and how to play" in this field - although the troubles facing the Iridium satellite communications organisation have caused them to take "a few deep breaths".
Hopkins says it is also possible that Boeing could set up a fourth division, encompassing such activities as "modification, maintenance, engineering services and data provision".
Source: Flight International