There have been many questions in the media this week about what recent problems on Boeing’s 787 Dreamliner mean for the company’s business outlook. The answer is that they basically mean nothing. America’s biggest exporter is headed for $100 billion in annual revenues circa 2015, and a lot of that money will be coming from sales of the super-efficient 787. If the FAA hadn’t elected to make this a federal case, most observers would see the Dreamliner difficulties for what they are: the usual startup glitches that occur when cutting-edge aircraft first begin service. In comparison with the wing problem on the Airbus A380, the Dreamliner issues look trivial.
The fear that exotic lithium-ion batteries in the Dreamliner could constitute an on-board fire hazard may help sell newspapers, but it isn’t grounded in reality. You have to alter the configuration of the battery into something that would never be installed on a plane to get it to burn. Boeing is so confident the battery issue can be resolved quickly that it hasn’t even considered searching for a different power source or supplier. So a year from now, it will be hard to remember what all the buzz was about. The 787 will be selling like hot cakes and Boeing rival Airbus will be struggling to catch up.
This morning brings news of a different kind of development on the military side of the house that is likely to have more bearing on Boeing’s future prospects — a positive bearing as it turns out. Boeing and Sikorsky have agreed to team on a joint rotorcraft demonstrator that will develop technologies for future medium-size military helicopters. The program could eventually provide a replacement for the Blackhawk, Apache, and other well-known rotorcraft. But there is more to the teaming announcement than the press release reveals, because the two companies have decided to form a strategic partnership for essentially all future medium helicopter competitions. That partnership, which mirrors the relationship Boeing and Sikorsky once had on the Army’s Comanche armed reconnaissance helicopter, will make them the dominant players in the military rotorcraft business for the foreseeable future.
In the years since James McNerney took the helm at Boeing, the outlook for the company has become better and better. On the commercial side, it is getting more orders than Airbus for the first time in many years because it is building planes that are more reliable and responsive to market needs. You wouldn’t know that from listening to the 787 coverage, but Boeing planes are so much better than Airbus planes that the European company’s A320 still hasn’t matched the reliability of a first-generation 737 — even though 737 is now entering its third generation. One the military side, Boeing has jettisoned problematic networking programs and is focusing in on core aerospace franchises where it is nearly unassailable such as satcoms, rotorcraft, bombers, tankers and sea-based fighters.
CEO McNerney has gradually wrung out all the inefficiencies left over from past mergers that impeded the company’s ability to leverage its world-class competencies across the full range of aerospace opportunities. So once Boeing gets past a few weeks of discomfort on its latest, greatest commercial transport, the marketplace will realize that the company is actually in better shape than ever before. If you think now is the time to bet against Boeing, then you better be prepared to lose all the money you put on the table.