Boeing signs $100m in services deals at order-light air show
INTERNATIONAL - Boeing Co seized on a lull in firm orders for passenger jets to sign more than $100 million in contracts for digital services for its newer but fast-growing global unit as the Paris Airshow enters a third day on Wednesday.
Boeing Global Services boss Stan Deal touted agreements with more than 10 global carriers ranging a multi-year deal with US-based Delta Air Lines for navigation services and a ten-year one with Hong Kong flag carrier Cathay Pacific Group for crew rostering.
The deals reflect a two-year-old push by the world’s largest planemaker into the higher-margin services business that includes aircraft parts and maintenance and analytics which Deal aims to grow to $50 billion in revenue in a decade from its 2018 revenue of around $17 billion.
Future aircraft like the 777X twin-jet and a potential new mid-sized aircraft known at Boeing as NMA are central to advancing the “challenging goal that we aspire to,” Deal said, referring to the $50 billion.
“The marquee part of it (777X) is to have the services better integrated in the airplane at the point of delivery,” Deal said.
The deals follow Monday’s announcement that Boeing will manage and maintain a global exchange inventory of parts for Airbus’ A320 and A320neo single-aisle aircraft for British Airways, the first such agreement by the US planemaker to support rival Airbus aircraft.
British Airways also signed a deal for three landing gear exchanges for its Boeing 777 widebody fleet, while Boeing’s subsidiary Jeppesen will provide United Airlines with analytics services to help the carrier optimize crew planning operations through its entire fleet.
BIG SALES PUSH
Boeing has also reorganized its sales operations as part of a push into services for civil and defense aircraft designed to increase the number of deals and boost profits as it will make it easier for Boeing to sell high-margin services at the same time as it sells planes.
Both Boeing and rival Airbus are muscling deeper into the higher-margin market for repairs, maintenance and analytics services in a push that has rattled the aerospace supply chain. The push comes as airlines try to keep a lid on costs by planning jet purchases and long-term operations together.
Airbus has set a goal of tripling services revenues from its commercial aircraft business to $10 billion within seven years and sharply reducing the number of times its jets are stranded on the ground for technical reasons, Reuters has reported.
Deal said Boeing continued to search for acquisitions after buying parts distributor KLX Inc for $4.25 billion, including about $1 billion of net debt, its largest deal since merging with McDonnell Douglas in 1997.
Other deals Boeing announced Wednesday were for flight crew planning for US carrier United Airlines, an aircraft health monitoring deal with Slovak charter airline Go2Sky, and a digital services agreement with Latvia’s Air Baltic.Reuters