Does Dubai Matter for Boeing, or Is It All About Bombers?
When the Dubai Air Show opens on November 8, Boeing Co. (NYSE: BA) is expected to announce some new industrial partnerships that expand on the company’s commercial agreements by emphasizing defense work. That’s hardly the same as announcing an order for dozens of new, expensive airplanes, but Boeing does need to do something to shore up its defense business.
Along with Lockheed Martin, Boeing announced Friday that it is formally protesting the contract award for the new U.S. Air Force Long-Range Strike-Bomber (LRS-B) to Northrop Grumman. Valued at some $80 billion over the life of the new planes, this was the last of the big plums dangling from the Pentagon tree. And Boeing is unlikely to go quietly.
In 2003, the company won the bidding for a new Air Force tanker. Then the Air Force discovered that two of the company’s executives had been involved in offering bribes related to the tanker contract. That sent a Boeing official to jail and cost a former CEO his job.
Then the contract entered a second bidding cycle, won by EADS, the former name of the company now known as Airbus. But that win was nullified by the Government Accountability Office on the basis of irregularities in the bidding review.
Boeing won the contract in 2011 after a third bidding round. The moral of the story is that if there is a lot of money at stake, Boeing is in it to win it. And that is what we expect to see with the LRS-B contract.
Meanwhile, back in Dubai, a Boeing executive has said that the company is assessing demand for its single-aisle 737s before deciding whether to match the 60 planes per month rate recently announced by archrival Airbus to take effect in 2019. Boeing has already said it is taking 737 production up from 42 planes a month currently to 47 in 2017 and to 52 in 2018.
Randy Tinseth, Boeing’s vice-president for commercial airplane marketing, is cited by Reuters: “We have the capability to do more and we do see pressure upwards.” There is unlikely to be an announcement in Dubai of a production increase for the 737.