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Boeing Defense turnaround helps company post record $101bn sales

Boeing’s revenue reached a record $101 billion in 2018, partly helped by a turnaround in the company’s defence unit, which won several large contracts thereby reversing more than a decade of declining sales.

Boeing Defense, Space & Security’s revenue grew to $23.2 billion last year, rising 13% from the year prior, the company said in a financial filing. Though, the division’s profit declined 27% to $1.59 billion for the year.

Previously, Boeing's defence revenues had fallen by more than one-third over the timeline of a decade: from $32.1 billion in 2007 to $21.1 billion in 2017. But, President Donald Trump’s higher defence spending and a string of three new military contracts put the manufacturer back in the game last year.

The company now projects its defence revenue in 2019 will reach $26.5 billion - $27.5 billion, a topline rise of more than 14%.

Boeing Defense’s back-order log is also growing and was $57 billion at the end of 2018, about 29.5% higher than the year prior. The aerospace firm says 30 percent of its defence back-orders were placed by foreign militaries.

The defence business is still dwarfed by Boeing Commercial Aircraft which posted $60.7 billion in revenue in 2018, up 5% from the year prior. Boeing Global Services is also nipping at the division’s heels, growing to $17 billion in sales, up 17% from the year prior.

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Boeing MH-139 helicopter

Boeing

Boeing also said it plans to reorganise its military derivative aircraft programmes. Beginning in 2019, all revenues and costs associated with military derivative aircraft, such as the 737-based P-8 Poseidon maritime patrol aircraft or the 767-2C freighter-based KC-46A Pegasus air tanker, will be reported solely in the Defense, Space & Security segment. Previously, revenues and costs associated with military derivative aircraft were shared between the Boeing Commercial Airplanes and Defense, Space & Security segments.

Boeing’s 2018 sales benefited from a US Navy order for 24 F/A-18 Super Hornets and Kuwait’s order of 22 F/A-18E and six F/A-18F Super Hornets. But most significant to the company’s order logs were a series of three new aircraft programmes awarded in August and September.

On 31 August, the USN awarded the company an $805 million contract to develop and produce four MQ-25A Stingray carrier-based unmanned refueling aircraft. A few weeks later, on 24 September, the firm was granted the first portion of a $2.38 billion firm, fixed-price contract to replace the USAF's Bell UH-1N utility helicopter fleet with the MH-139, developed with Leonardo Helicopters from the commercial AW139. Then, three days later, the USAF selected it for its $9.2 billion T-X requirement, covering the production of 351 jet trainers, plus 46 simulators and associated ground equipment.

Boeing chief executive Dennis Muilenburg said on a January 30 earnings call that the company is ground-testing the MQ-25A and plans to fly the aircraft for the first time in 2019.

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