March 2006
Boeing Sees the Light;
Is it the end of the tunnel or a landing A340?
This last decade of the 20th century was demoralizing for Boeing, the world’s leading manufacturer of mainline commercial aircraft. Beginning in 2000, when its only major aircraft competitor, Airbus S.A.S, received more orders and then followed with delivering more planes in 2003, Boeing additionally has had to deal with the impact of rising fuel costs, multiple CEOs dismissed for unethical behavior, World Trade Organization lawsuits, and the negative effect September 11th had on air travel.
Nevertheless, 1Q06 results for Boeing portray a company with a substantial increase in profits and an increase in order backlog of 42% to a record $213bnn. Boeing further regained its world dominance in 2005 by reversing the trend of the past 5 years and outselling Airbus, when measured by the value of new aircraft orders. Deliveries are up by 40%, operating earnings increased by 81%, and their operating margin improved from 8.2 to 10 percent (Done, 2006).
What changes were undertaken by Boeing to re-establish its market position and profit stability, can they be sustained, and is Boeing’s current global market outlook in-synch with its customers, the international airline community?
Desperate Times Call for Desperate Measures
Analysts consistently attribute part of Boeing’s “turn-around” to the hiring of James McNerney, Jr. in June 2005, as Chairman, CEO and President. A product of Yale University and Harvard Business School, McNerney has established himself as someone who knows how to manufacture more efficiently and profitability, which will impact Boeing’s commercial aircraft division, and increase revenues from the acquisition and execution of government contracts. ...