Change Could Be A Boon To Boeing Commercial Aircraft
Within the coming year, Boeing
Commercial Aircraft sales reps could see their travel reduced
considerably from going around the world to going across the
parking lot. The client: Boeing's defense operation.
Boeing is locked in another epic competition with
Lockheed-Martin for a contract to send the Navy up to 150 maritime
patrol aircraft. Lockheed's entry is a variant of the P-3 Orion, a
design that's been in use since the 1960s. Lockheed says that
aircraft is time-tested and well-proven on maritime patrol and
sub-hunting missions.
Boeing's idea: sell 'em a modified version of the 737. Boeing
insiders say, if the deal goes through -- and if the USAF doesn't
cancel the embattled plan to lease and purchase 100 converted 767s
for the tanker fleet, Boeing could find a majority of its defense
aviation contracting involves turning civil aircraft for military
applications.
"Certainly, if you look at the potential going forward and what
the military has expressed interest in, we're easily talking more
than 200 airplanes," said Boeing spokesman Randy Harrison.
That would be a big plus for the commercial division, which has
fallen behind Airbus in worldwide deliveries. In the meantime,
Boeing's defense business has surpassed its sale of civilian
aircraft, growing ten percent last year. While commercial
deliveries plummeted last year -- taking in $22.4 billion -- the
company's defense business has grown to almost $27.4 billion.
But the military marketing effort at
Boeing has been marked by the scent of scandal. The government has
penalized Boeing for stealing Lockheed secrets leading to the
Evolved Expendable Launch Vehicle (EELV) contract. Lockheed is suing Boeing over stolen proprietary
information on the project that Lockheed says allowed Boeing to win
the USAF contract.
Now, the government has extended for another three months its
investigation into a possible conflict of interest involving
Boeing's sale and lease of 100 767 converts to be used as aerial
tankers. The probe centers on a former USAF official who oversaw
the tanker deal and later ended up as a Boeing VP. The VP and CFO
have been fired.
While losing the Navy deal -- a contest in which Boeing's
proposal convert 737-700s into aircraft that spend hours at a time
loitering over possible sea targets -- may not be a bad blow to
Boeing, losing the tanker deal could have dire consequences. Since
9/11, demand for 767s -- the platform proposed by Boeing in the
tanker deal -- has dropped dramatically. "There's very little
demand in the commercial market for that aircraft, and the
likelihood is that (the 767) line would have to close without the
government contract," said Paul Nisbet, an analyst with JSA
Research. If the tanker contract goes through, it could keep the
767 line open for another 20 years, he said.
The maritime patrol deal, on the other hand might indeed be a
long shot. "A 737 is not typically the plane you want for loitering
low over the ocean, so it's a bold interpretation of what the Navy
might need," Nesbit said.