Boeing Has Record Sales of $87 Billion in 2013

Boeing Has Record Sales of $87 Billion in 2013

Boeing Co. on Wednesday reported almost $87 billion in sales last year, a record for the world’s largest aerospace company.

The Chicago-based firm said it had $86.6 billion in revenue in 2013, a 6 percent increase from 2012, on sales of commercial aircraft such as the 737 MAX and 787–9 and military equipment such as the KC-46A tanker and the P-8 maritime patrol aircraft. Profit also increased 20 percent to a record $7.07 earnings per share, it said.

“2013 was a very successful year for Boeing,” Chairman and Chief Executive Officer Jim McNerney said during a conference call with investors. He also downplayed recent management changes at the company and said he doesn’t plan to step down. “I’m not planning on retiring anytime soon,” he said.

Boeing’s defense segment accounts for more than a third of its overall sales. The unit’s revenue last year increased 2 percent to $33.2 billion despite automatic federal spending cuts, known as sequestration, which sliced into the Defense Department budget.

Within the segment, military aircraft sales fell 1 percent to $15.9 billion, network and space systems revenue rose 8 percent to $8.5 billion and global services and support sales increased 1 percent to $8.7 billion.

“Our Defense, Space & Security unit overcame a tough operating environment to record expanded revenue, earnings and margins while executing to our commitments on the KC-46A tanker and developing and delivering important new capabilities to customers, such as the P-8 maritime aircraft,” McNerney said.

The company in 2013 delivered a total of 164 military aircraft, including 48 F/A-18 Super Hornet fighter jets, 14 F-15E Eagle fighter jets, 10 C-17 Globemaster III cargo planes, 44 CH-47 Chinook cargo helicopters, 37 AH-64 Apache attack helicopters and 11 P-8 maritime patrol planes.

The Navy’s program to develop the latter has drawn congressional scrutiny in the wake of a scathing Pentagon audit that concluded the aircraft isn’t effective at its main missions of hunting submarines and conducting wide-area surveillance.

Frank Kendall, the Pentagon’s top weapons buyer, on Tuesday defended the plane as a “good product” and the Navy’s acquisition effort to buy a total of 122 of the aircraft at an estimated cost of $35 billion as a “relatively successful program.”

Boeing last year also delivered a total of seven satellites, four of which went to the military.

Despite the threat of additional U.S. budget cuts, the company was optimistic on its forecast for 2014, with expected overall revenue of as much as $90.5 billion, including as much as $31 billion in defense sales. Even so, the figures were lower than investors were expecting and shares of the company slid almost 5 percent to $130.75 at 11:05 a.m. in New York trading.

Lockheed Martin Corp., the world’s largest defense contractor, has also hinted it may revise upward its sales forecast for next year after Congress reached a deal to undo some of the across-the-board budget reductions that were set take effect in next two years.

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Strange not a word on the report on the Junk Strike Fighter software delays and other F-35 problems that was just released????????

nothing news worthy here with Washington DC golden defense mistress.…. Based in Chicago.… connect the dots.…

The defense industry is the greatest hedge against economic down turn ever. The worse the job you do, the more money the federal government pays you. It’s like magic money, it flows without regard to how great the national debt, without regard to how poorly the economy in general is doing, and with an inverse relationship to the quality of job you do. This magic money will continue to flow to these defense contractors as long as the US taxpayer is willing to pay the price, or to defer the price to their children who will really get soaked.

We covered this at our sister blog, DefenseTech: http://​defensetech​.org/​2​0​1​4​/​0​1​/​2​9​/​r​e​p​o​r​t​-​f​-​3​5​-​cra

You have it mostly right. But the taxpayer is NOT willing to pay the price. They just can’t do anything about stopping this gravy train because they’ve distracted with Republican “family values” issues and Democratic “welfare state” promises.

Yes, you’re exactly right. They like to talk endlessly about wedge issues that keep people stirred up, while leaving the issues of substance out of the news and out of the public debate. The fact that the public is being manipulated is no excuse, however, for allowing these issues to be ignored. The stakes are simply too high. In the case of our defense, we are talking about company executives getting rich while causing our nation to unilaterally disarm. Plus their method of getting rich is highly wasteful due to the low profit margins and the hundreds of billions that are wasted so a few can make tens of millions a year. They waste vast amounts of money plus the talents of many of this nations best and brightest minds.

As I said on DefenseTech you can accuse virtually any large contractor of all sorts of stupidity, you can accuse them of price-gouging, whatever, but this scheme you keep going on about simply does NOT make financial sense for anybody sane. What sort of bizarre get rich scheme involves making LESS profit than you would from success? These corporations change CEOs pretty often and I find it hard to believe that ALL of them are mentally ill so they adopt this scheme which has no benefit unless one of the goals is to prevent those working for or with them from benefiting from success. What happened to the whole “a rising tide lifts all boats” idea? Unfortunately there are less defense contractors than there used to be but it also still puts their corporations at future risk.

And please read the above comment before you call me an industry shill or ask me if I work for Lockheed (I don’t). I am merely trying to be as realistic as possible here.

Are you arguing with the voices in your head again? Do you have some point to make beyond defending defense corporation CEO’s from some fictitious attack on their mental health? And what the hell does rising boats have to do with anything?

As usual you didn’t respond to ANYTHING I had to say. You could at least attempt to have a reasonable discussion. And that is an old Kennedy quote about economics, about how capitalism usually works.

Let me put this in simpler terms. How does this strategy you accuse these corporations of make financial sense? It would generate far less income than doing the job well, it lessens their future prospects, where is the logic behind it?

Look, I responded to what you said. What I didn’t respond to is what you think you said. I’m not a mind reader. They don’t teach that in engineering school. I still have no idea which part of what I said you have a problem with, so let’s recap.

1. When a “for profit” company gets reimbursed for development costs and makes a profit on top of that, then they have no incentive to finish development sooner instead of later, nor do they have any incentive to decrease the cost of the development. In fact, they have just the opposite. They have a financial incentive to drag out development and to jack up the cost of both development and of the weapon being developed.

2. The risk the contractor assumes during development is zero. Anyone can “design” anything. Just because it is designed, doesn’t mean it works. Even if the parts all fit together thanks to the miracle of 3D CAD, it doesn’t mean the parts aren’t going to break the first time the weapon does what the weapon is supposed to do. God only knows why this would be a difficult concept for anyone.

3. When you produce a weapon, then it does have to work. Look at the JSF prototypes. The one Lockheed built was able to take off vertically. The one Boeing built didn’t, even though they assured the world it would for nearly a decade. You don’t think they lied, do you? Of course not. A defense contractor would never lie. When weapons don’t work award fees go from 97% to 40%. When weapons don’t work suddenly the customer is less inclined to cover cost over runs by rolling them into contract changes that cover the over run amount with profit. Cutting metal or making composites also requires a lot of capital investment. Milling machines have to work. Autoclaves have to work. Repairing equipment like that is not an expense you can charge the government for. It comes out of the profits. There are many such expenses in production. That’s why they same 10% profit doesn’t create as big a shareholder’s dividend during the production phase as it did during the design phase.

Now is that so damn hard to understand?

Despite the threat of additional U.S. budget cuts, the company was optimistic on its forecast for 2014, with expected overall revenue of as much as $90.5 billion, including as much as $31 billion in defense sales. Even so, the figures were lower than investors were expecting and shares of the company slid almost 5 percent to $130.75 at 11:05 a.m. in New York trading.

How about the real investors i.e. the US Taxpayer?

You’ll get nothing, and like it!

1. By following such a strategy they risk severe cuts to the number of aircraft the government orders. Each airframe is a lot of work in itself but it also represents an opportunity for sales such as weapons for those aircraft, future upgrades of the sensors and defensive system, new variants of the aircraft, etc. This is an opportunity for decades worth of work and contracts on thousands of advanced fighter aircraft. They would throw that away for this 10% profit you claim they make off development of the aircraft to an operational status? They also lose foreign customers and damage their own reputation, meaning a higher chance one of their competitors will be chosen in other programs.

2. Not anyone can design something that actually flies. Nor something with VLO stealth, STOVL capability, a very sophisticated sensor system, etc. But this isn’t just design work. They need to work with subcontractors for all sorts of different components, establish a production line and tooling for the manufacture of the aircraft. By intentionally screwing up Lockheed is also screwing many of those subcontractors. I’d hope that future work becomes much more difficult if everybody ends up hating you for bad business practices. After that is all said in done, they got to build the EMD aircraft, perform countless hours of testing, start low rate initial production and go on from there.

3 The government needs to be realistic and work with the company when problems arise and things don’t go as planned. Yet the government accountants, lawyers, and oversight committees should be doing their job and ensuring nothing like you describe occurs. Have they failed to do so? It seems to me that Lockheed is not making the money they could be making if everything in the F-35 program was going to plan. This is supposed to be a cost-plus award fee contract where profit is determined by meeting all sorts of different benchmarks. And of course the FRP contracts they would be getting now would be much larger affairs than the current LRIP lots.

Why would Boeing lie about the X-32? You think they wanted to lose? The method of STOVL operation they employed was very similar to that employed by the Harrier, yet they either were not getting the level of thrust/lift they hoped for or the aircraft’s weight was higher than estimated. In this history of STOVL aircraft, this has happened very often, the Rockwell XFV-12 probably being the best example. By comparison the X-35 functioned flawlessly. Of course the X-32 and X-35 were not representative of the final design, it was a proof-of-concept. They were even further removed from their finalized combat capable designs than the YF-22 and YF-23 were.


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