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20 Mar, 2024 11:01

Boeing mulls sale of defense assets – Bloomberg

The divestment is reportedly expected to boost the balance sheet of the crisis-hit aerospace multinational
Boeing mulls sale of defense assets – Bloomberg

Boeing might sell at least two of its defense unit businesses to improve its finances amid mounting safety concerns, Bloomberg reported on Tuesday, citing unnamed sources familiar with the discussions. 

The world’s second largest aircraft manufacturer by market capitalization recently hit severe turbulence, with its shares plummeting amid a series of quality control scandals that have resulted in grounded planes and numerous safety checks. 

Boeing has engaged financial advisers to gauge interest in several of its smaller units, including Digital Receiver Technology and unspecified defense programs under the corporation’s global services division, sources told Bloomberg, adding that efforts have been underway for about a year. 

The aerospace giant is also reportedly mulling options for divesting its stake in United Launch Alliance (ULA), the rocket-launch joint venture co-owned with Lockheed Martin. Earlier this year, media reports emerged that ULA had attracted interest from Jeff Bezos’ Blue Origin. 

Any defense sale by Boeing, one of the Pentagon’s prime contractors, would face scrutiny from US regulators as concerns about consolidation among the biggest suppliers are increasing, Bloomberg said. Moreover, antitrust regulators such as Lina Khan, chairwoman of the Federal Trade Commission, have reportedly been critical of Boeing’s monopoly over US civil aircraft production.

The plane maker is now facing a wave of safety audits of its 737 MAX 9 in the wake of a near-catastrophic accident on January 5, when an Alaska Airlines flight bound for California from Portland, Oregon, had to turn back after a door panel blew off at 16,000 feet, injuring several of the 171 passengers aboard. 

Boeing shares have lost more than 30% since the accident. On Tuesday, Federal Aviation Administration (FAA) head Mike Whitaker told Reuters that the manufacturer needed to improve safety culture and address quality control issues before it would be allowed to boost production of the 737 MAX, previously labelled by Boeing as “the safest airplane” on the market.

A US safety audit of the manufacturing process of the troubled jet reportedly found dozens of shortcomings, including the use of dish soap and a hotel key card as makeshift tools. It had been previously reported that the FAA identified 97 “non-compliance” issues at Boeing and failed the aircraft maker on 33 out of 89 product audits. The regulator temporarily grounded all 737 MAX 9 jets in the US for safety inspections.

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