Boeing Services expansion wise, necessary move

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Introduction
March 6, 2017, © Leeham Co.: Boeing CEO Dennis Muilenburg wants the company to participate in the aftermarket aircraft services business and set a goal of $50bn in revenue in the coming years. He looks at Boeing’s current business, the former Boeing Commercial Aviation Services (CAS), and sees a single-digit market share in a worldwide trillion-dollar market potential. Muilenburg understandably wants a greater share of this. But LNC believes there is an additional driver: the intensely competitive commercial airliner business faces even greater competition in the coming years. Prices are under pressure today. China is developing its own aerospace industry, which will eat into sales by Boeing (and Airbus) in the home market. Russia has ambitions to renew its home-market airliner industry. Boeing’s new Global Services unit is a hedge against the prospect of falling profits at Boeing Commercial Airplanes as these factors converge.
Summary
  • Airbus, Boeing single-aisle prices under pressure.
  • A330/350 keeps 787 pricing down.
  • Boeing’s NMA business case may depend on after-delivery services contracts.

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