The Boeing Company, founded in 1916 and based in Chicago, Illinois, is the world’s biggest company in the aerospace industry, it is the number two manufacturer of commercial jets (followed by rival Airbus) and the number two defense contractor next to Lockheed Martin. The business units of the company include Boeing Defense and Commercial Airplanes, Security and Space (BDS; constituted of Network and Space Systems, Military Aircraft, and global Support and Services). Boeing Company also engages in leasing and financing services to both military and commercial customers through the company’s Capital Corporation. The company’s sales of more than 50% are made in the USA.
The Boeing Company has subsidiaries, and all the subsidiaries engage in development, support of commercial jetliners, design, missile defense, launch systems, manufacture, human space flight and services worldwide. Five segments are operated by the company; Boeing Military Aircraft (BMA), Global Services and Support (GS&S), Network and Space Systems (N&SS), Commercial Airplanes and Boeing Capital Corporation (BCC). Each segment plays a vital role in ensuring the company discharges its services in the most prudent and profitable way (Plunkett, 2009).
The commercial Airplanes Segment engages in development, production and marketing commercial jet aircraft for a range of cargo and passenger requirements, as well as the provision of related support services to the commercial airline industry. In addition, it offers aircraft modifications, maintenance documents, aviation services support, training, spares and technical advice to government and commercial customers.
The Boeing Military Aircraft (BMA) segment engages in production, modification, development and research of manned and unmanned military weapons systems for mobility and surveillance, global strike and engagement markets, as well as provision of related services.
The Network and Space Systems (N&SS) segment engages in the development, production, research and modification of services and products to assist its commercial and government customers in the transformation of their operations via its network integration, command, communications, intelligence, information and cyber applications and reconnaissance space exploration and satellites (Mathew, 2007).
Boeing Capital Corporation (BCC) arranges, facilitates and engages in the provision of financing solutions for its government airplanes customers and commercial customers. The segment’s financing portfolio is composed of equipment under finance leases, operating leases, investments, assets meant for re-lease or sale and notes and other receivables. The Global Services and Support (GS&S) segment offers training, logistic support services for operations and platforms of the military, upgrades and maintenance.
The Boeing Company is known for a long tradition of aerospace innovation and leadership. The company aims at expanding its product line and services in order to meet the increased and emerging needs of the customer needs. It has a broad range of potentials that include creating new, efficient members of its airplane family; integration of military platforms, war fighter and defense systems through network-enabled solutions; creation of advanced solutions in technology; and making the arrangements on innovative customer –financing options (Plunkett, 2009).
The company offices being based in Chicago, Boeing hires more the 171,000 employees across the US and in 71 other countries. This constitutes the most talented, diverse and innovative workforces anywhere. Out of the 171,000 employees more than 144,000 of them are college degree holders, including 36,000 advanced degree holders, in almost all the business and technical field from close to 2,600 universities and colleges in the whole world (Boeing, 1961).
The Boeing Company is organized in two broad business units; Space and Security, Boeing Defense and Commercial Airplanes. Various bodies within the company support the two units; Boeing Capital Corporation is the major supporter of the two units besides being the global financial supporter; Shared Service Group, provides a variety of services to Boeing globally; and the Boeing Engineering, Operations and Technology, which assists in the development, acquisition, application and protection of innovative processes and technologies.
Boeing Commercial Airplanes
For over 40 years, Boeing has been the largest maker of commercial jetliners. Boeing merged with McDonnll Douglas in the quench of being the best commercial jets manufacturers. Currently, the main commercial airplanes are 747, 737, 767 and 777 families of commercial products and the Boeing Business Jet. The company puts more development efforts on the Boeing 787 Dreamliner together with the 747-8. The Boeing company has approximately 12,000 commercial jetliners in service globally, which is estimated to be 75 percent of the global fleet (Mathew, 2007). The company aims at helping the operators sustain their airplanes in peak operating condition and through the commercial aviation services the company is able to meet the broad objective. The Aviation services offer a full range of high standard modification, engineering, information and logistics services to its worldwide customer base, which is constituted of cargo and passenger airlines, overhaul and repair facilities, as well as maintenance. Through Training and Flight Services in Boeing Company, the most comprehensive and globally largest airline training services provider, it is able to train flight and maintenance crews in the 100 seater and above airliner market.
Boeing Defense, Space & Security
The BDS, Boeing Defense, Space & Security, engages in the provision of end-to-end services for systems (large-scale) that enhance land, space, air and sea based platforms for worldwide military, commercial and government customers. In addition to producing, designing, modifying and supporting fighters, rotorcraft, missiles, transports, bombers, spacecrafts and munitions for military, commercial and civil use, BDS developed enhanced capabilities via network-enabled solutions, intelligence and communications, reconnaissance and surveillance technologies. BDS engages in support of the USA government as a major integrator of the systems on a number of programs of national significance, together with NASA’s International Space Station and, the Midcourse based Defense program (Missile Defense Agency’s Ground). BDS aims at the expansion into new adjacencies and markets, including manned and unmanned systems, energy management, cyber security, logistics, and support (Boeing Company and United States, 1974).
Boeing Capital Corporation
This is the worldwide provider of solutions in the financing problems. It works very closely with the Defense, Space & Security and Commercial Airplanes in the arrangement of structures and provision of financing in the quench of facilitating the delivery and sale of Boeing military and commercial products. With approximately $4.4 billion 2011 year end portfolio, Boeing Capital Corporation merges global reach and Boeings financial strength, meticulous knowledge of the company’s equipment and customers, and the skills of a seasoned collection of professionals in finance.
Engineering, Operations & Technology
It enhances productivity and growth of Boeing Company by driving functional and technical excellence across the enterprise. The main objective of this unit is to support the overall company units by ensuring that there is delivery of high quality, low-cost technical services in information technology. It also aims at the provision of integrated strategies that ensure readily available technology, environmentally progressive and competitively protected business environment; efficient engineering and highly disciplined, supplier and operations management support that ensure the success of the program. A particular attention is paid by the organization as pertains to the success of the development programs and aims at attracting, developing an excellent functional and technical workforce.
Shared Services Group
Shared Service Group aims at allowing the business units to center their attention on profitable growth through the provision of the required infrastructure services in running their global operations. The group provides a variety of services worldwide, together with facilities services, recruitment, disaster preparedness, conservation programs, transportation, staffing, fire protection, wellness programs, employee benefits and services and the acquisition of all non-production services and goods. The group also offers comprehensive services in travelling to the employees of Boeing and manages the acquisition and sale of all owned and leased property of Boeing. Through integration of services, the group delivers higher value, builds “lean” operations and processes, leverages the power of buying and simplifies access to Boeing services.
Building of Boeing 787 Dreamliner
It is a long range, wide-body, two-engines airliner developed by Boeing Commercial Airplanes. It accommodates 210 to 290 seaters, based on the variant. The Boeing Company states that 787 Dreamliner is the most fuel efficient airliner and the first major airliner to make use of composite materials in its construction. According to Boeing, it consumes 20% less fuel compared to a similarly sized airliner. It has many distinguishing features; noise reducing chevrons on the engines, four-panel windshield and a smoother contour (British Broadcasting Corporation, 2010).
Permanently high fuel prices may not be good for 787 sales
In building 787, a one-piece fuselage is used eliminating; 1500 aluminum sheets and around 40000-50000 fasteners. This makes it light and can be able to carry heavier weight at a lower fuel consumption rate. Ideally, it consumes 20% less fuel per seat compared to a similar sized airplane. This means it can withstand high cost of fuel but mostly only in the short run (Boeing Company and United States, 1974). Though doing better than other airplane under high fuel prices, in the long run other alternatives are likely to take over e.g. bullet trains. This means that, unless there is recovery of the fuel price over time, the high price will not be god for the 787.
Investments in the 787 and A380 may be hinged on future fuel forecast
Currently the cost per barrel of fuel is around $130. Though we may not be able to tell with certainty, the cost of fuel will have risen in 20-30 years to come. Statistical analyses of past trends in prices of fuel can be used to predict the prices and hence determine the likely demand of the airplane. This can be used to determine the current investment in 787 and A380 and even the technologies to pursue e.g. lighter plane designs.