Boeing is considering selling at least two defense businesses as the beleaguered aircraft maker weathers its biggest crisis in years.
Financial advisers contacted potential buyers on behalf of Boeing to gauge interest in several smaller units, people familiar with the discussions said on condition of anonymity. That's what it means. The effort had been in the works for about a year, ahead of the Jan. 5 midair explosion that put the aircraft manufacturer under intense scrutiny, one of the people said.
Assets that could be on the block include Maryland-based Boeing's digital receiver technology division, which makes products for government intelligence and defense customers, the people said. Potential buyers are also being approached for some defense programs in the Global Services division, some of the people said.
The aircraft maker had previously considered selling its Argon ST subsidiary, but that process has been put on hold, one of the people said. In 2010, the company acquired a Virginia company that makes military command, control, surveillance and reconnaissance systems for about $775 million.
Boeing declined to comment. Shares rose as much as 1.1% after Bloomberg reported on the deliberations.
The company is also continuing to consider an investment in United Launch Alliance, a rocket launch joint venture it co-owns with Lockheed Martin, the people said. Bloomberg News reported in January that ULA was attracting interest from Jeff Bezos' Blue Origin.
Boeing has not made a final decision on the disposition, and plans are still subject to change, some of the people said. The company regularly reviews its asset portfolio, the people said.
the spirit speaks
The deliberations come as Boeing faces increased government scrutiny of its commercial aircraft production following the devastating crash of its 737 MAX 9 aircraft in early January. Since then, Boeing and Spirit AeroSystems Holdings, which makes most of the 737s, have confirmed they are in talks to bring the former subsidiary back under Boeing control.
Based on Spirit's market value before the talks became public two weeks ago, such a deal could cost Boeing more than $3 billion.
Pressure mounts on Boeing CEO Dave Calhoun to show a way out of the crisis, with the coronavirus disease (COVID-19) pandemic and the early world of Max family aircraft There is a risk that the recovery from years of financial losses due to the grounding of flights will be prolonged. The company needed to reduce its debt burden to fund future growth and was counting on rapidly ramping up 737 production over the next two years to generate cash.
This plan was thwarted in the aftermath of the January 5 accident. That's because regulators are limiting production of the dollar-boosting 737 planes until the company proves it can get its manufacturing processes back on track. Boeing stock has lost more than 30% in value this year, twice as much as the next worst stock on the Dow Jones Industrial Average.
Defense sales will come under scrutiny from the Pentagon, which has expressed concerns about consolidation among defense prime contractors. Antitrust regulators, including Federal Trade Commission Chair Lina Khan, have also criticized Boeing's monopoly on U.S. commercial aircraft production.
