It is uncommon for business leaders to publicly declare that revenue is not a top priority.
But Ted Colbert, chief executive of Boeing Defense, Space & Security (BDS), is doing just that.
When he took charge of BDS 2022, the key military supplier was being buffeted by manufacturing quality challenges, enduring labour and supply chain disruptions and billions of dollars in losses from aggressively bid contracts.
Since then, Colbert has laid out two priorities: stabilising Boeing’s essential manufacturing inputs and delivering high-quality defence products.
“I’m not chasing revenue,” Colbert said during an 9 July interview at Boeing’s Arlington, Virginia headquarters overlooking the Pentagon. Instead, the former head of the Boeing Global Services is seeking to return the airframer to its origins as a world leader in aerospace design and production.
“This is an engineering company,” Colbert declares. “Defence, at its core, is about great engineering.”
Colbert faces short- and long-term obstacles to reaching that goal.
The workforce at BDS is “less experienced than ever”, he says, resulting from high rates of turnover and retirements during the Covid-19 pandemic. That same problem is impacting Boeing suppliers, affecting the availability and quality of critical parts.
Colbert believes the tide has finally turned on those problems. Increased spending on training for both factory and engineering employees, along with embedding Boeing specialists at key suppliers, has improved key metrics, including those related to first-time quality of components, on-time delivery, travelled work, re-work and employee safety.
The defence giant has also rapidly moved away from the fixed-price contracting strategy that generated billions of dollars in losses on programmes like the new 747-based Air Force One presidential jet and T-7A trainer jet for the US Air Force.
In the past year, Boeing has even walked away from new defence opportunities, including a major contract to replace the ageing fleet of aircraft able to command the USA’s nuclear arsenal.
Known as the Survivable Airborne Operations Center (SAOC), that programme is intended to deliver a successor to the Pentagon’s current Boeing E-4B Nightwatch jets. BDS withdrew from the SAOC competition in December, citing a new strategy of increased scrutiny of new development contracts.
“That was very intentional,” Colbert says eight months later. “We would not sign up to terms in the deal that… would potentially put us in a similar place that we are on today with some of our other programmes.”
In discussing that decision, the BDS chief repeats a mantra guiding his strategy: “Stability in everything we do.”
However, there remains one realm in which Boeing continues accepting calculated risk.
‘WE HAVE TO MAKE SOME BETS’
Bucking its otherwise conservative approach, Boeing has placed a $1.8 billion wager on the future of its fighter aircraft business.
That bet comes in the form of a new classified manufacturing facility near the BDS headquarters in St Louis, Missouri. Construction work is now underway on what Boeing calls the Brownleigh site, located adjacent to the company’s existing fighter assembly and delivery campus at St Louis Lambert International airport.
Boeing revealed the project in June, saying the new factory is intended to “support future combat aircraft programmes”, without naming specific customers or projects. A billboard outside the construction area features a sixth-generation-style black jet and proclaims Boeing’s commitment to fighter manufacturing.
Notably, the company has committed to building the 102,000sq m (1.1 million sq ft) plant before actually securing a contract to produce any next-generation fighters.
“Our military customers have urged the industrial base to invest now to ensure the United States and its allies can keep pace with rapidly advancing and increasingly aggressive near-peer threats,” says Steve Nordlund, Boeing vice-president of air dominance. “We listened and made the most-significant investment in the history of Boeing’s defence business.”
The BDS St Louis complex is already home to facilities assembling the F/A-18E/F Super Hornet for the US Navy (USN), the F-15EX Eagle II fighter and T-7A Red Hawk trainer for the US Air Force (USAF).
Work is also nearing completion in nearby Mascoutah, Illinois on a production facility for assembling the MQ-25 Stingray autonomous refueller for the USN.
Boeing’s investment in the new St Louis factory might appear risky, given the current budget climate in the USA, where support for next-generation fighters appears to be waning. The USN is reducing funding for development of a sixth-generation fighter called the F/A-XX and senior USAF officials recently appeared less than committed to the service’s Next Generation Air Dominance (NGAD) programme. That secret project’s goal is suspected to be developing a successor to Lockheed Martin’s F-22 Raptor air superiority fighter.
“It is going to be a challenging next couple of years to sort out the resources,” USAF chief of staff General David Allvin said of NGAD on 13 June during an Air & Space Forces Association event.
Asked if the service can or will remain committed to NGAD as it also develops low-cost, autonomous Collaborative Combat Aircraft (CCA), Allvin was far from emphatic. “We’re going to have to make those choices, make those decisions and… that’s going to probably play out in the next couple of years,” he said.
Although little is known about the NGAD programme, the top officer at the USAF’s Air Combat Command recently muddied the waters further.
“There is no official replacement to the F-22 right now,” General Kenneth Wilsbach said on 10 July at the Mitchell Institute in Washington, DC. “Everybody wants to talk about NGAD as a jet… It’s not a jet, it’s a family of systems.”
Although nothing has been confirmed, that family is widely expected to include a crewed aircraft that will pair with multiple unmanned CCA jets capable of performing various combat roles.
While Boeing has not formally acknowledged its participation in the NGAD effort, it is widely believed to be a finalist for the contract, alongside rival Lockheed. Northrop Grumman bowed out last year.
Although the USAF only released a formal request for proposal (RFP) in 2023, prototype aircraft are rumoured to already be flying. The RFP says the air force intends to choose a primary manufacturer for the new fighter by end-2024 and Wilsbach confirms the service is currently in the source-selection process.
Although Boeing has been silent about the USAF programme, its pre-emptive investment in a classified fighter factory appears to be part of its strategy to secure an NGAD win, which is seen as vital to shoring up BDS’s fortunes.
“We have to make some bets,” Nordlund says.
He notes that Super Hornet deliveries are projected to conclude in 2027 and that the USAF has cut its projected acquisition of the F-15EX to less than 100 aircraft. It will also be several years before some of the company’s promising new development programmes reach the more-lucrative full-rate production stage.
“We’re on fixed-price development programmes with T-7A and MQ-25,” Nordlund says. “So that’s not where we’re making our money.”
Boeing will also soon deliver its final F/A-18E/F to USN, which is winding down procurement of the carrier-based strike fighter.
Failure to secure a new fighter contract would inject an uncomfortable amount of uncertainty into the future of Boeing’s highly-specialised manufacturing workforce. The $1.8 billion factory investment is intended to signal its commitment to producing next-generation aircraft for the USA.
“In order for us to be attractive to our customer, we’ve got to demonstrate the capacity to deliver on their mission,” Colbert says.
The new site is being constructed in accordance with unspecified US government security and classification requirements, meaning it can only be used for domestic customers.
HUGE OPPORTUNITY
Boeing clearly hopes the costly investment will entice the Pentagon to award it what could be a once-in-a-generation opportunity.
Rival Lockheed had ran the tables on fifth-generation fighter production, winning both the air superiority and strike fighter contests, with the F-22 and F-35 Lightning II, respectively. Northrop, meanwhile, secured the USAF’s stealth bomber recapitalisation contract with its B-21 Raider flying-wing.
With F-35s projected to remain in production and operation for decades, Boeing has limited opportunity to secure a next-generation fighter contract. Not doing so could jeopardise the already limited industrial base that supports US fighter production.
The precarious nature of that base was evident during a 25 June tour of Boeing’s F-15EX assembly line. During that visit, vice-president of manufacturing James Dewees, who began his career with Boeing as an aviation mechanic, told FlightGlobal that just over 600 workers manage aircraft production for that entire fighter platform.
Such small and specialised labour forces are highly vulnerable to production disruptions, as witnessed across the aerospace sector when the Covid-19 pandemic pushed many workers to retire or take jobs in other industries.
Many aircraft manufacturers and their suppliers still report supply chain and labour issues as a result of those turbulent years.
Boeing anticipates construction work at the secure Brownleigh site will be complete in 2026, though Nordlund says the company has flexibility to adjust the timeline.
Meanwhile, Boeing’s recent delivery of the first operational F-15EX Eagle II marked a major milestone, being the first time in more than two decades it had turned over a new combat aircraft to the USAF. Its most recent previous shipment had been a final F-15E Strike Eagle to the service in 2001.
Since that time, Boeing has developed several major improvements for the F-15, including giving the jet digital fly-by-wire (FBW) flight controls, additional weapon stations and a modernised touchscreen cockpit.
The first combat-configured Eagle II departed the St Louis final assembly and check-out site on 5 June. With the tail number 008, the twin-engined fighter arrived in Portland, Oregon, where it will serve with the Air National Guard (ANG).
The USAF also says it will field F-15EXs with squadrons in Japan, where older F-15Cs have been retired.
Boeing test pilot Michael Quintini says the Eagle II was designed to make the transition process as quick and easy as possible for pilots. “One of the things that we pulled back on very quickly was not getting too far afield from the original software that we had on the E-model,” the former USAF pilot says.
Boeing calibrated the F-15EX’s controls to feel similar to the legacy variants currently flown by US pilots.
“It was designed to be as close as possible, Quintini adds. “The amount of stick throw required to perform a similar manoeuvre is about the same.”
Because of this, along with a choice to keep flight software and cockpit displays similar to older models, pilots can shift “from legacy to advanced very quickly”, he says. Pilots already certified on C- or E-model F-15s can transition to the EX with as few as two certification flights after completing academic instruction and simulator runs.
NEW DOG, NEW TRICKS
The Eagle II’s FBW controls were originally installed on the F-15SA, a Strike Eagle variant produced for Saudi Arabia and the first F-15 not having the original hydraulic-mechanical actuator system. Boeing further developed the FBW controls for Qatar’s F-15QA.
The F-15EX’s FBW system provides “improvements in slow-speed handling” and aerodynamic performance, says Quintini.
Maintaining flight stability at slow speed gives the jet a tighter turn radius – a survivability asset during dogfights. Smaller, lighter fighters like the Lockheed F-16, Dassault Rafale and Eurofighter Typhoon can achieve a similar turning radius at higher speeds.
The FBW technology also let Boeing give the F-15EX two new weapons stations – numbers one and nine, located on the outboard wings. Hanging air-to-air missiles far out on wings produces drag and loading forces during high-g manoeuvres. The old flight controls could not compensate for the increased stress, preventing earlier F-15s from carrying the extra munitions.
However, the digital flight controls are calibrated to prevent unsafe loading and to correct aerodynamic instability created by four extra missiles. That has allowed Boeing and the USAF to certificate the F-15EX with an unsurpassed capacity for 12 air-to-air missiles.
By contrast, the stealthy F-35A can accommodate four missiles in its internal weapon bays, along with additional munitions from underwing stations, at the cost of increased radar signature.
Lockheed says the F-35A has a maximum weapons payload of 8,160kg (18,000lb), compared to Boeing’s claim of 13,300kg for the F-15EX. That weapons advantage has led Boeing to describe the non-stealthy Eagle II as an ideal complement for the low-observable F-35.
The Eagle II also boasts the advantage of excess capacity in onboard power generation and cooling. Boeing designed the jet with room to grow, only using roughly 50% of current capacity.
By contrast, capability improvements to the F-35 have left that fighter operating outside design tolerances for power and cooling, forcing the USAF to undertake a costly engine core upgrade programme with F135 propulsion supplier Pratt & Whitney.
Despite selling points, Boeing has yet to secure a first export customer for the F-15EX. It says it is discussing possible sales with Indonesia, Israel, Poland and Saudi Arabia, and current legacy F-15 operators are also being targeted, including Japan, Singapore and South Korea.
As of late June, the second combat-configured F-15EX (tail number 007) was poised for delivery to the ANG in Portland. Along with the lead example, it will represent the conclusion of Lot 1 deliveries, with Lot 2 shipments due to begin in late 2024.
With Super Hornet production winding down, Boeing executives are hoping international interest will boost sales of the Eagle II, even as they await the outcome of their $1.8 billion bet on future fighter production in St Louis.
POINT OF NO RETURN
Long a mainstay of its fighter business, the F/A-18E/F Super Hornet is now nearing the end of its production life, with new deliveries to the US Navy (USN) set to conclude.
Boeing is assembling 17 new-build Block III Super Hornets for the USN under a $1.3 billion contract placed in March that will sustain F/A-18 manufacturing into 2027.
Separately, the company working to modernise existing Block II Super Hornets under a service life modification (SLM) programme, with the first two upgraded jets delivered to the navy in late June. Boeing launched SLM work in July 2023, saying the modifications give the jets another 4,000h of flight time.
This likely marks the final chapter of new Super Hornet production.
Even if additional interest in the battle-tested carrier fighter emerges, Nordlund tells FlightGlobal the F/A-18 programme has effectively reached a “point of no return”, citing difficulty procuring long-lead items necessary for production.
“You’ve got to keep a supply base engaged,” Nordlund says, noting that many small “mom and pop” companies supply the F/A-18 programme and have limited ability to adjust capacity.
RETURN TO PROFITABILITY
While headwinds and uncertainty abound, Boeing leadership remains optimistic about the company’s prospects. Colbert’s focus on stability is yielding progress, with first-quarter financial results showing a profit at BDS after two years of annual losses.
However, the defence chief cautions that trend likely did not continue in Boeing’s second-quarter, results for which the company plans to release on 31 July. Quality and production issues in the commercial aircraft division have impacted several defence programmes, including the KC-46 Pegasus tanker and P-8 Poseidon maritime patrol aircraft – both of which are derivatives of Boeing commercial jets.
Boeing also continues absorbing losses on the two VC-25B Air Force One replacements, which outgoing chief Dave Calhoun has said may never be profitable. Colbert describes that highly-complex, ultra-low volume programme as more akin to shipbuilding than traditional aircraft assembly.
Despite those challenges, the BDS chief reports continued strong demand for all of Boeing’s products, including rotorcraft and munitions. He also remains sanguine about budgetary uncertainty in Washington, noting the USA’s potential foes are spending big on modernising their military forces, including with new fifth-generation fighters like Russia’s Sukhoi Su-57 and China’s Chengdu J-20.
“We know that our adversaries have invested in some of these areas,” Colbert says. “So I have a hard time thinking our costumer will not want to invest in some of these areas.”
Financially, Colbert’s goal is to return Boeing to consistent single-digit margins, which he describes as the “most-important thing” in the defence aerospace industry.
Achieving such returns may involve Boeing taking on more subcontractor work. With its forthcoming takeover of aerostructures provider Spirit AeroSystems, Boeing is set to become a major supplier of key defence programmes, including Northrop’s B-21 stealth bomber, and Bell’s V-280 next-generation tiltrotor for the US Army.
“Us being prime on everything may not be the right answer,” Colbert says.
However, Boeing ultimately still sees itself as a primary manufacturer of aircraft, one historically known for quality in both design and production.
“We are one of the greatest… engineering companies in the world,” Colbert says.
Whether he can successfully restore the company’s battered reputation to its former status remains to be seen.
The $1.8 billion factory investment is intended to signal its commitment to producing next-generation aircraft for the USA.
