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The 4Q17 Performance of Boeing’s Global Services Division

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Feb. 6 2018, Updated 7:33 a.m. ET

Boeing’s Global Services division

In this part, we’ll review Boeing’s (BA) Global Services division performance in 4Q17. In that quarter, the segment reported revenues of $4.0 billion, a 17.0% increase over its ~$3.4 billion in revenues in 4Q16.

In mid-2017, Boeing carved a new division out of its existing divisions—Global Services. The company created the segment by integrating the services capabilities of its government, space, and commercial sectors into a single business.

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Key developments in 4Q17

In 4Q17, Boeing Global Services was awarded a contract for F-15 Qatar Sustainment. Also, the division signed an agreement with All Nippon Airways for the 787 landing gear exchange program. Plus, the company entered into a P-8I Poseidon training agreement with India.

Global Services started flight testing on the first 737-800 Boeing Converted Freighter. The segment also received an order from GECAS for seven conversions. The company expanded its digital solutions to drive growth, with its portfolio touching ~$1.0 billion in annual revenues in 4Q17.

Management guidance for 2018

Revenues from the BGS (Boeing Global Services) segment are expected to be $15.0 billion–$15.5 billion in 2018. In the new vertical, Boeing aims to grow more quickly than the average services market growth of 3.5% through expansion of its services offerings and market share gains.

The company noted that BGS offers cost-competitive, agile services to government and commercial customers worldwide. Under the Global Fleet Care program, the division has registered more than 2,500 aircraft from 60-plus airlines.

ETF investment

Investors optimistic about industrial companies can consider investing in the Industrial Select Sector SPDR ETF (XLI). This ETF has 17.3% weight on major aerospace (HXL) and defense (LMT) (ERJ) companies. Airline (DAL) companies in the US make up 10.8% of XLI’s portfolio. Notably, Boeing makes up 7.8% of the portfolio holdings of XLI.

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