Boeing Contemplating Possible Sale of Space Division
Boeing, competing heavily with Airbus, is currently battling financially and technically challenging situations. Their new CEO, Ortberg, has shared plans to lead the corporation out of this predicament through a restructuring strategy. Insider details have surfaced, painting a possible picture of this plan.
Reports suggest that Boeing might be contemplating the sale of its NASA-related operations, including the malfunctioning Starliner spacecraft and support activities for the International Space Station (ISS). This move, part of Ortberg's strategy to streamline the company and reduce financial losses, is still in the early stages and may not culminate in any transactions, as per sources familiar with the situation who spoke to Dow Jones Newswire. Similar reports have been published in "The Wall Street Journal."
Boeing is currently grappling with numerous financial struggles. The company's major union has refused two contract proposals and extended a strike that has halted production of the best-selling 737 MAX and wide-body 767 and 777 aircraft. Meanwhile, Boeing's space and defense projects have been affected by delays and budget overruns. Historically, the company has collaborated extensively with NASA on significant programs such as the Apollo astronaut missions and the space station construction. However, in recent times, SpaceX has taken over Boeing's role as NASA's primary partner.
Some anticipate that Boeing will maintain its position responsible for the Space Launch System (SLS), a colossal rocket, for which NASA pays Boeing to develop for future lunar exploration missions. The rocket successfully completed its inaugural flight for NASA around two years ago, despite Boeing facing production problems and quality control issues with the system.
Boeing, in collaboration with Lockheed Martin, has been actively seeking a buyer for United Launch Alliance, their rocket launch company, for over a year. The joint venture operates independently of its parent corporations, focusing on launches for US national security. Currently, it is conducting flights with a new rocket called Vulcan Centaur, set to replace older launch vehicles.
Do Less, But Do It Better
Ortberg, who assumed the CEO role in August, has expressed considering asset sales and distancing from problematic programs. Apart from the core commercial and military businesses, almost everything is on the table, Ortberg mentioned during a conference call with analysts last week. "It's better to do less and do it well, rather than do more and not do it well," he stated.
Ortberg terminated the head of Boeing's defense and space division in September. The space business is a minor portion of this division, which manufactures fighter jets and helicopters for the Pentagon, reporting a loss of $3.1 billion on revenue of $18.5 billion in the first nine months of 2024.
Boeing is reporting substantial losses and has accumulated a $60 billion debt. The leadership is also under scrutiny due to a string of technical mishaps. Earlier in the year, a portion of a cabin wall detached mid-flight on a Boeing 737 MAX-9. The corporation is also facing chronic delivery delays.
The European Union, as a potential buyer, could be interested in Boeing's NASA-related operations, including the Starliner spacecraft and support activities for the International Space Station (ISS), given Boeing's financial struggles and considerations for asset sales.
Given the financial challenges Boeing is facing and Ortberg's strategy to streamline the company, the European Union, with its robust presence in the aerospace industry, could provide a viable solution for selective asset acquisitions from Boeing's NASA operations.
