Will Boeing’s Commercial Airplanes Segment Recover From Its 737 Max 8 Setback Next Year?

by Trefis Team
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Boeing’s (NYSE:BA) Commercial Airplanes segment took a sizable hit this year in the aftermath of the 2 fatal crashes involving the company’s 737 Max 8 aircraft, with revenues for full-year 2019 likely to fall to below $46 billion from over $60 billion in 2018. However, we believe that Boeing’s cornerstone segment should get thing back on track in 2020 with revenues likely to cross $61 billion. We detail trends in Boeing’s Revenues over the years along with our forecast for 2019 and 2020 in an interactive dashboard.

Boeing primarily makes money through design, development, manufacture, sale, service and support of commercial jetliners, military aircrafts, satellites, missile defense, human space flight and launch systems and services. It is largest manufacturer of 100+ seat airplanes for the worldwide commercial airline industry and one of the largest defense contractors in the U.S.

A Quick Look At Boeing’s Revenues

It has 3 primary operating segments:

  • Commercial AirplanesThis segment develops, produces and markets commercial jet aircraft and provides fleet support services, principally to the commercial airline industry worldwide.
  • Defense, Space & Security SystemsThis segment is engaged in the research, development, production and modification of manned and unmanned military aircraft and weapons systems for strike, surveillance and mobility.
  • Global ServicesThis segment provides services to Boeing’s commercial and defense customers worldwide.

Its main competitors in its core markets are:

  • Commercial Airplanes: Airbus, Bombardier, Dassault.
  • Defense, Space & Security Systems: Almaz-Antey, Leonardo, Thales, Airbus Group, General Dynamics, Northrop Grumman, BAE Systems, Raytheon, Lockheed Martin.

 

Boeing’s Revenues to decrease by 8.7% by 2019, reaching to $92.3 Bil from the current levels of $101 Bil.

  • Company added $8 Bil to its topline in 2018.
  • Due to the ongoing grounding of Boeing 787 MAX, company’s revenues are expected to decline by 9% in 2019.

For more information on how Boeing’s revenue growth compares with Airbus and BAE Systems, view our interactive dashboard analysis.

 

A) Revenue from Commercial Airplanes Segment to decline by 25% in 2019, with its share in revenue to decline to 49% in 2019 from 60% in 2018.

  1. Commercial Airplane segment will see a decline of 24.8% in its revenue due to grounding of 737 MAX since March 2019 due to safety concerns.
  2. Boeing has developed software and training updates for the 737 MAX and continues to work with the FAA and global civil aviation authorities to complete remaining steps toward certification and readiness for return to service is expected in Q4 2020.
  3. Meanwhile we expect a recovery in deliveries coupled with an uptick in average price per airplane to boost Commercial Airplanes revenues to $61.3 billion in 2020

 

B) Revenue from Defense, Space and Security Systems Segment to increase by 18% in 2019, with its share in revenue to increase to 30% in 2019 from 23% in 2018.

  1. This was driven by higher volume on satellites, weapons, and T-7A Red Hawk (formerly T-X Trainer), partially offset by lower volume on F-15.
  2. In 2019, the company received contracts for the fifth production lot for 15 KC-46A Tanker aircraft for the U.S. Air Force and nine AH-64E Apache helicopters for the U.S. Army.

 

C) Revenue from Global Services to increase by 12% in 2019, with its share in revenue to increase to 21% in 2019 from 17% in 2018.

  1. The increase in revenue growth is on account of full year effect of KLX Inc., an aviation service provider, acquisition of which was completed in late 2018.
  2. Over a long term, Boeing expects this division to grow near 3.5% mirroring the overall growth in the global aviation industry.

 

Data around Boeing’s Defense, Space and Security Systems as well as Global Services Revenues over the years is available in our interactive dashboard.

 

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