Boeing will remain a strong force in the military aircraft market, the head of the company’s defense unit said at the Paris Air Show, rejecting speculation that the Pentagon’s No. 2 contractor is being edged out of that business.
Jim Albaugh also defended his leadership of Boeing’s defense segment, which was hit particularly hard by a series of defense cuts announced by US Defense Secretary Robert Gates in April.
“The numbers are pretty darn good,” Albaugh said in an interview with Reuters, reacting to questions about the health of Boeing’s defense sector, which has faced setbacks even as the commercial sector is grappling with production delays and deferred plane deliveries.
Boeing has lost several key defense contracts in recent years, and others have been scaled back by the Pentagon, but the company has taken steps to offset those losses — even before they happened, Albaugh argued.
He cited a strong focus on three growth areas: cybersecurity, unmanned vehicles and intelligence.
“There may be a flat spot for a year or two, but we’re positioned for growth,” he said, noting that Boeing had weathered previous cyclical downturns by changing its focus.
The company has branched out into other government business such as intelligence and homeland security to avoid being too dependent on Pentagon and NASA orders, Albaugh said.
He said the two agencies accounted for about 95% of business eight to nine years ago, but now stood at 60 to 65% after hard work to move into other sectors.
Boeing is fighting hard to win a multibillion-dollar US Air Force contract for new refueling aircraft, after losing the contract in an earlier round to rival Northrop Grumman Corp which partnered with Airbus parent EADS.
“Obviously, this is a very important program, but there’s no one competition that makes or breaks this company,” he said.
Albaugh said there was continued strong demand for Boeing’s F/A-18 fighters and cited a potential market of about 500 airplanes. He said the P-8 maritime surveillance plane could generate over 100 international orders, and Boeing also had a range of different unmanned vehicles to meet customers’ needs.
Boeing is also continuing to market different variants of its F-15 fighter, and announced on Wednesday that it would spend its own money to further develop the partly stealthy F-15 Silent Eagle version, with an eye to a flight demonstration in the third quarter of 2010.
The announcement came at the air show following meetings with potential customers.
“Making this commitment to get the program through to a flight demonstration will ultimately help international customers understand how this aircraft meets their need for a flexible, long-range, large-payload, high-speed, multi-role strike fighter with reduced observability,” Albaugh said in a statement.
Boeing said it would continue discussions with a number of international aerospace companies about potential co-development opportunities.
Bruce Lemkin, deputy undersecretary of the Air Force for international affairs, told Reuters that the government had not received any formal request for information on the fighter plane variant.
Albaugh said the company’s C-17 transport plane was also still generating international interest, a statement echoed by Lemkin, who said “quite a few” countries were on the verge of ordering the large military transport, which could help extend the plane’s production line for one to two years.
Big orders are in the offing from Taiwan and Turkey, among others, Boeing’s C-17 chief said this week.
Albaugh acknowledged that the Pentagon’s decision to end the ground vehicle portion of the Future Combat Systems program cut into the potential revenues, but said Boeing would continue to play an important role in the overall program.
The Pentagon’s decision to scrap the Transformational Satellite communications program also hurt, but wasn’t unexpected, he said. He said Boeing could benefit from additional orders for its Wideband Global SATCOM satellites, as the Pentagon replaced the expected TSAT capacity.
He said he and other top Boeing leaders were committed to remaining in the space business, despite the lack of big new government satellite programs, and were aggressively going after a big commercial satellite deal,
Also poised for growth was Boeing’s rotorcraft business, which includes the popular Chinook and Apache helicopters, as well as the V-22 Osprey, which takes off and lands like a helicopter, but flies like a plane.