The document provides an agenda and overview of Boeing, including:
- Boeing's divisions and key products in commercial aircrafts and defense segments.
- Financial highlights like 2010 revenue of $64.3 billion and net income of $3.3 billion.
- Management discussion of lower 2010 revenue and higher operating earnings.
- Industry drivers of air travel growth and aerospace market value forecast.
- Competitive analysis shows Boeing is largest player and competes primarily with Lockheed Martin, BAE Systems.
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Boeing Company
1.
2. Agenda
Company Overview
Management Discussion and Analysis
SWOT Analysis
Industry Overview
Porters Five Force Model
Competitors
Valuation
Recommendation
3. Company Overview
Boeing is the world’s largest aerospace company and leading
manufacturer of commercial airplanes and defense, space and
security systems
It supports airlines and U.S. & allied government customers in
more than 90 countries
Headquartered out of Chicago Boeing employs more than
160,000 people across the United States and in 70 countries
Products include commercial and military
aircraft, satellites, weapons, electronic and defense
systems, launch systems, advanced information and
communication
4. Boeing - Divisions
Market Segment ( 2010)
Commercial Aircrafts
Revenue %
50%
Defense, Space & Security(BDS)
Boeing Military Aircraft (BMA)
22.14%
Network and Space Systems
(N&SS)
14.7%
Global Services and Support
(G&SS)
12.83%
Boeing Capital Corporation (BCC)
0.99%
5. Commercial Aircraft-Products
Manufactures family of jetliners – Cargo and passenger
Narrow body model-737
Wide body model-767 and 777
Under Development wide body models-747-8 and 787
Offers aviation services support, aircraft
modifications, spares, training and technical advice
6. Boeing – Commercial Aircrafts
Delivered 462 airplanes in 2010
Revenue grew by 11% for the year 2010
Boeing 787 has 847 orders from 57 customers in 37
countries
More efficient production lines
Year
Commercial Airplane Deliveries
2006
398
2007
441
2008
375
2009
481
2010
462
7. BDS - Products
Boeing Military Aircraft
Engaged in R&D production and modification of manned and unmanned
military weapons
Mobility – AH-64 Apache, F/A-18 E/F Super Hornet
Network and Space Systems Segment
Assists customers in transforming their operations through network
integrations – International Space System, Satellite System
Global Services and Support Segment
Operates, maintains, trains, upgrades and provides logistic support functions
for military platform and operations – KC-767 International Tank
82 % of revenues of BDS department have come from defense
12. SWOT Analysis
Strengths
• Growth through acquisitions
• Strong focus on research and development
• Realignment for growth and expansion to
new markets
Opportunities
• Boeing's global outlook for aircraft demand
• Surge in the US defense spending
Weakness
• Highly leveraged
• Declining profits and margins
• Sluggish performance of business divisions
• Dependence on United States Department of Defense as they
account for 82% of BDS revenue in 2010.
Threats
• Increasing prices of titanium and aluminum
• Increasing fuel prices
• Intense competition
• Heavy dependency on US government contracts
• Government regulations
• Environmental regulations
13. Management Discussion &
Analysis
Revenues in 2010 decreased by 6 % compared to 2009
No deliveries on 747 program because of transition from 747-400 to 747-8
Lower 777 deliveries as production rate changed from 7 to 5 per month
BDS revenues decreased by $1,718 m due to lower revenues in Network and Space Systems Segment
Operating earnings in 2010 increased by $ 2,875 m compared to 2009
Commercial Airplanes earnings increased by $ 3,589 m primarily due to $ 2,693 m costs related to first
three 787 flight test aircraft included in R & D in 2009
Long term outlook for the industry remains positive due to fundamental drivers of air travel growth such as:
Economy growth
Trade
Liberalization of air traffic rights between countries
14. Management Discussion &
Analysis
To increased the manufacturing of existing
commercial airplanes
The company expects the R&D costs to go down in the
future
16. Industry Overview
Industry – Aerospace and Defense
Revenues accrued by manufacturers from civil and military aerospace and defense procurements
Major products and services:
Aircraft
Aircraft engines and engine parts
Other aircraft parts and auxiliary equipment
In 2014, the market value is expected to be $1,190.5 billion, an increase of 29.3% since 2009
Defense is the largest segment accounting for 71.8 % of the sector’s total value
$ 3.6 trillion market for 30,900 new airplanes over the next 20 years
17. Industry Overview
Global aerospace and defense industry segmentation:
Category
Americas
22.0 %
Asia – Pacific
59.1 %
Europe
External Drivers:
% Share
19.0 %
Total
100 %
Federal Funding for Defense
Demand from international airlines
Industry systems and technology
Demand from domestic airlines
18. Porters Five Force Analysis
Supplier Power (Moderate)
Suppliers are small. However, the high quality inputs provided by suppliers
dilute the bargaining power of players
The quality and availability of these inputs is highly important to the quality
of the end products in the aerospace and defense industry, increasing the
power of the suppliers
Too many suppliers
Buyer Power (Moderate)
Large size of competitors due to merger activity
Players are limited as Airbus and Boeing have a virtual duopoly
Buyers typically government organizations which flex their financial
muscles to dilute the bargaining power of players
19. Porters Five Force Analysis
Threat of New Entrants (Low)
High capital outlay and expertise
The arms industry has become highly concentrated, nationally and
internationally
Threat of Substitutes (Low)
No real threat of substitutes in defense and aircrafts, however air freight
section might be affected with increase in concerns of carbon emissions as
companies are seeking eco-friendly reputation
Degree of Rivalry (Strong)
Due to duopoly, Airbus and Boeing are the sole rivals and they are quite
evenly matched
Competition is intense in terms of winning defense contracts and
companies use innovation and new technology to differentiate their service