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How Much Of Boeing's Revenues Comes From The U.S. Government?

Boeing (NYSE:BA) is an American multinational corporation that designs, manufactures, and sells airplanes, rotary aircraft, rockets, satellites, telecommunications equipment, and missiles worldwide. It is the largest commercial aircraft manufacturing company in terms of volume as well as revenue. The U.S. government is the single largest customer for Boeing and brought in almost 31% of company’s revenue in 2018. Notably, Boeing accounts for 21% of the U.S. Department of Defense (DoD’s) procurement budget. We detail the importance of the U.S. government to Boeing’s Revenue in an interactive dashboard, parts of which are summarized below.

An Overview of Boeing’s Revenues

Boeing’s 4 divisions are expected to make $92.3 Billion for the full year of 2019.

  1. Commercial Airplanes: $45.6 Billion (49%)
  2. Defense, Space & Security Systems: $27.4 Billion (30%)
  3. Global Services: $19.0 Billion (21%)
  4. Boeing Capital Corporation: $ 0.3 Billion (<1%)

In terms of Customer, Boeing’s Expected Revenues of $92.3 Bil in 2019 can be divided into 2 categories:

  1. US government – $28.6 Bil (31%)
  2. Others – $63.7 Bil (69%)

 

Understanding The U.S. Government’s Contribution By Segment:

Boeing has 3 operating segments and the contribution of sales to the US government for each segment is as follows:

(1) Boeing Commercial Aircrafts (BCA):

  • This segment accounted for 60% of the total revenue generated by Boeing in 2018.
  • This segment develops and produces commercial jet aircraft and provides fleet support services to the commercial airline industry worldwide, The family of commercial jet aircraft in production includes the 737 narrow-body model and the 747, 767, 777 and 787 wide-body models. Boeing is currently developing certain 737 MAX derivatives and the 777X program.
  • Since this segment only produces commercial airplanes it does not generate any revenue from the U.S. government.

 

(2) Boeing Defense Systems (BDS):

  • This segment accounted for 23% of the total revenue generated by Boeing in 2018.
  • This segment is engaged in the research, development, production and modification of manned and unmanned military aircraft and weapons, systems for strike, surveillance and mobility, including fighter and trainer aircraft; vertical lift, including rotor-craft and tilt-rotor aircraft.
  • In 2018 out of the total revenue from the BDS segment of $23.2 Bil, 86% of the revenue came from the U.S. government.

 

(3) Boeing Global Service (BGS):

  • This segment accounted for 17% of the total revenue generated by Boeing in 2018.
  • This segment provides services to its commercial and defense customers worldwide. BGS sustains aerospace platforms and systems with a full spectrum of products and services, including supply chain and logistics management, engineering, maintenance and modifications, upgrades and conversions, spare 2 parts, pilot and maintenance training systems and services, technical and maintenance documents, and data analytics and digital services.
  • In 2018 out of the total revenue figure of $17 Bil for the BGS segment, 36% was from the U.S. government.

Data around how the U.S. government’s share of Boeing’s BGS revenue have trended over the years is available in our interactive dashboard.

 

The U.S. government has significant dependence on Boeing for its military procurement

  • A large allocation of Department of Defense (DoD) budget is allocated towards Weapon Procurement (second after Operations and Maintenance).
  • For the last three years Boeing has been the second-largest defense contractor to the U.S. government (with Lockheed Martin being the largest defense contractor) in terms of value in overall spending
  • Boeing has a share of ~20% in the DoD’s weapon procurement outlay as detailed in our interactive dashboard.

 

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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