GlobalData : New missile sales shift post-COVID-19 Boeing further towards defense

14 May 2020
New missile sales shift post-COVID-19 Boeing further towards defense Posted in Aerospace, Defense & Security

Following yesterday's (Wednesday 13 May) announcement of Boeing's US$3.1bn sales of air-to-surface missiles to supply Saudi Arabia and other allies;

Nicolas Jouan, Aerospace and Defense Analyst at GlobalData, a leading data and analytics company, offers his view on the future of Boeing:

'Boeing did not register any new commercial airplane orders for the entire month of April, and the B737 MAX is now standing at -281 orders net of cancellations for the year 2020. The company has already announced a suspension of dividend, jetliners production cuts and a US$25bn bond offering to face the COVID-19 crisis.

'The announcement of a US Navy Foreign Military Sales contract for 650 AGM-84 Stand-off Land Attack Cruise Missile Expanded Response (SLAM ER) to equip Saudi Arabia's F-15s is therefore excellent news for the aerospace company. Combined with other contracts to supply US allies, Boeing will see more than US$3bn of fresh cash flow coming from SLAM ER sales.

'This news is another sign that the future of Boeing resides in the defense side of its business. Defense, space and security already represented 34% of Boeing's revenues in 2019, against 42% for commercial airplanes. These proportions could very well be reversed in 2020 as the collapse of air travel virtually interrupted deliveries of B737 MAX (still grounded since two successive crashes last year) and B787 Dreamliner, the lifeline of Boeing's commercial aircraft business. Meanwhile, military platforms such as the P-8A Poseidon continue registering orders. The sales of missiles to Saudi Arabia also reflect the strong market positioning of Boeing with the F-15E Strike Eagle variants used by many operators around the world.'