Boeing’s Defense segment
Boeing’s (BA) Defense, Space & Security segment is its second-largest division with respect to revenues. This division’s operations include manufacturing military aircraft. The segment is engaged in the development, research, and modification of products related to network and space systems.
In 4Q17, the company’s Defense, Space & Security vertical posted revenues of ~$5.5 billion, a 5.0% increase from ~$5.3 billion in 4Q16.
Defense, Space & Security segment’s milestones
Boeing (BA) noted that in 4Q17, it received FAA certification for its 767-2C (or KC-46) tanker aircraft. The company expects progress on the path to final certification and delivering the first 18 tankers in 2018.
Under the Defense, Space & Security vertical, Boeing secured new orders worth $10.0 billion in 4Q17. The segment’s backlog totaled $50.0 billion, out of which 40.0% of its orders pertained to international customers. A major order includes a contract to supply 36 advanced F-15 fighters to Qatar.
In 4Q17, Boeing kept its commitment to the Missile Defense Agency to have 44 ground-based interceptors in place at the end of 2017. It also delivered the 150th EA-18G Growler to the US Navy.
Boeing also advanced on the Commercial Crew program by completing its Design Certification Review. This is a primary requirement before docking with the International Space Station.
Management’s insights for 2018
In the Defense, Space & Security segment, Boeing (BA) expects revenues of $21.5 billion–$22.5 billion in 2018. These estimates are based on anticipated higher weapons volume as well as the strength of its international fighter business.
The US federal budget has not been finalized for 2018. However, the company has seen support for funding levels above President Trump’s budget request for a variety of programs. These programs include the F-18, CH-47 Chinook, AH-64 Apache, Ground-Based Midcourse Defense, the V-22, and Space Launch System.
Boeing was recently awarded a ~$6.6 billion contract from the Pentagon. The contract includes the continuation of managing the Ground-Based Midcourse missile defense system. The defense system is designed to stop North Korea’s or Iran’s intercontinental ballistic missiles. Boeing anticipates high international demand for its defense and space offerings for rotorcraft, commercial derivatives, and satellites.