Recapping Boeing’s Hyperactive Thursday

Print Email

Thursday was a crowded news cycle for Boeing Co. (NYSE: BA). First the company announced the acquisition of Aurora Flight Sciences. Then a small Seattle firm, Zunum Aero, which Boeing and JetBlue Airways Corp. (NASDAQ: JBLU) have invested in, announced its first product would be a 12-seat regional plane that uses hybrid-electric propulsion. Oh, and then Boeing released third-quarter delivery numbers. A busy day.

The deal for Aurora, best known as a drone designer and builder, was in some ways telegraphed by comments made a couple of weeks ago by Boeing’s Leanne Caret, CEO of the company’s defense and space business. Caret told CNBC that the defense business was looking for acquisitions and is very focused on growth, and that Boeing is “continuing to look at other ways to increase our top line through mergers and acquisitions.”

Aurora brings a technology innovator to Boeing and promises to enhance not only the company’s defense capability but also add to Boeing’s commercial jet products.

At a press conference following the announcement, Greg Hyslop, Boeing’s chief technology officer and senior vice president of the company’s Engineering, Test & Technology division, said, “We’re always looking at a lot of different things to acquire,” mentioning specifically investments by the firm’s VC arm HorizonX in Zunum Aero (hybrid electric aircraft), SparkCognition (artificial intelligence), Upskill (augmented reality for manufacturing) and C360 (360° video and augmented/virtual reality).

Defense One cited a further comment from Hyslop:

Bringing Aurora into this through an acquisition, you can kind of see that the world is going to be about hybrid electric airplanes, or all electric airplanes. The world is going to be about more autonomy and how artificial intelligence enables that. They’re all part of that picture. We don’t know what that market’s going to look like in the future, but as it forms. We want to be there and we want to lead.”

As if to confirm Boeing’s perspicuity, Zunum Aero announced yesterday that its first hybrid-electric product would be a 12-passenger commuter plane designed to reach small regional airports. The plane’s range is more than 700 miles and its top cruising speed is 340 mph. The firm wants to hit a target operating cost of $250 an hour, a level the company’s co-founder and chief technology officer called “unbeatable.” Zunum is currently looking a first delivery of the aircraft in 2022.

Source: Zunum Aero

Neither of Thursday’s announcements compares to Lockheed Martin’s $23 billion acquisition of Rockwell Collins nor to Northrop Grumman’s $7.8 billion acquisition of Orbital ATK. But if Boeing is really going shopping, a bigger deal can’t be ruled out.

And a bigger deal is most likely in the defense and space business, where a massive federal contract to replace the U.S. intercontinental ballistic missile (ICBM) force is being contested by Boeing and Northrop Grumman. Over the multi-decade life of that program, the contract’s value to the winner could total $1.5 trillion.