The Future of Boeing in the U S and Abroad

An Examination of Boeing Operations in Two Different Countries Today

Today, the Boeing Company (hereinafter alternatively “Boeing or “the company”) is the largest manufacturer of commercial jetliners, defense systems, security and space systems in the world, as well as a leading service provider in the aftermarket support industry. Despite the grounding of its 737 Max jetliner fleet following two deadly crashes in 2018, the company has succeeded in remedying the casual problems and its global market share continues to grow. To determine how Boeing competes in different markets, the purpose of this paper is to provide an examination of the company’s business operations in the United States and South Africa. To this end, an overview of the company and an analyses of Boeing’s commercial operations in the United States and South Africa. In addition, a discussion of the results of these analyses is followed by a summary of the research and important findings concerning the company’s current and future outlook in the paper’s conclusion.

Overview of The Boeing Company and Analysis of Its Domestic Operations

Currently headquartered in Chicago, Boeing was originally founded in Seattle on July 15, 1916 by an American timber merchant, William E. Boeing (Boeing profile, 2021). At present, Boeing’s domestic operations account for nearly 30% of its total global revenues (Global focus, 2021). Although Boeing’s operations in the United States have historically included a major focus on aerospace-related research and development, the company has also maintained a firm commitment to develop sustainable relationships with its domestic strategic supply chain partners domestically and abroad (Boeing Company SWOT analysis, 2021). The company’s commercial operations in the United States are depicted graphically in Figure 1 below.

Figure 1. Boeing locations in the United States

Source: Boeing headquarters and office locations, 2021

The company currently manufactures and markets a dizzying array of aerospace-related products in the United States, including commercial and military aircraft, state-of-the-art weaponry, communications satellites and sophisticated defense networks as well as information and communication systems (Boeing profile, 2021). Beyond the foregoing offerings, Boeing also provides numerous other cutting-edge defense systems such as tilt-rotor and conventional rotary and fixed-wing aircraft, rotorcrafts, tanker aircraft and anti-submarine aircraft as well as various types of military attack aircraft (Boeing Company SWOT analysis, 2021). Furthermore, the company also provides a wide range of services for the public and private sectors in the U.S., including logistics support, maintenance, performance-based training and associated support services (Boeing Company SWOT analysis, 2021).

A record-breaking 2.2 million people flew over this Fourth of July weekend. That’s not only the most of any weekend since the start of the pandemic, but some 12,000 more than the same weekend in 2019. The crush of travelers was so intense, both on the roads and in the skies, that it led to skyrocketing fuel prices, rental car shortages and widespread flight disruptions (Moon, 2021). Lean offers Boeing an all-inclusive approach in managing the value-stream of a company. It further presents a sustainable business model that prioritizes customer and industry demands, births innovative ways of satisfying them and keeps Boeing in business (Ageyman, 2021).

It is important to point out, though, that many of the products and services that are offered by Boeing are not limited to the United States and there is significant overlap between the company’s domestic and global operations since these offerings are marketed worldwide. In addition, the company has also continuously expanded its global presence since its founding based on the products and services that were first developed in the U.S. While the company’s operations in other countries also feature many of the above-described military and commercial offerings, Boeing’s commercial operations in South Africa have by necessity been shaped by recent political, social and economic events in that country and these issues are discussed further below.

Analysis of Boeing’s Business Operations in South Africa

While the company maintains offices in Johannesburg, South Africa, Boeing’s physical and commercial presence on the African continent actually dates back almost three-quarters of a century (Boeing in Africa, 2020). In fact, Boeing accounts for the lion’s share of the aircraft used by Africa’s commercial fleets, and boasts more than 400 aircraft servicing more than 40 airline customers across the continent, accounting for about 70% of the total airplane market in Africa today (Africa overview, 2021). Although the company’s has numerous strategic partnerships throughout the African continent, Boeing places a high priority on its South African presence. For instance, according to the company, “In South Africa, Aerosud Aviation Pty. Ltd. delivers production parts to Boeing Commercial Airplanes programs and in 2011, Boeing announced a partnership with 43 Air School, Africa’s largest flight training organization, to offer a pilot training program” (Boeing in Africa, 2021, p. 3).

It is especially noteworthy that the company has succeeded in maintaining viable commercial operations in many African nations during periods of political unrest and even civil wars over the years, including in its South African market which has experienced severe economic downturns in recent months following weeks of violent riots and looting. In addition, Boeing’s fortunes on the African continent as well as globally were also adversely affected by the high-profile crash of an Ethiopian Airlines’ Boeing 737 Max in March 2019 which followed hard on the heels of another such disastrous crash in Indonesia in 2018. Not only did these fatal crashes result in the grounding of the Boeing 737 Max fleet worldwide, the company ultimately paid $2.5 billion to resolve criminal charges that it had engaged in fraudulent activities by concealing important information about the aircraft from the U.S. government (Gebre, 2021). More recently, the Boeing 737 Max has returned to full service in South Africa as well as most of the rest of the African continent after the company successfully modified the aircraft to address the underlying problems that were responsible for the two eventful crashes (Gebre, 2021).

In addition, the company also maintains close ties with South Africa’s Mango Airlines, a wholly owned subsidiary of the national South African Airline which is based at OR Tambo International Airport located near Johannesburg. For instance, according to a recent trade journal report, the company announced that it had received an order from Mango Airlines for its next-generation technologies to support the airlines’ Boeing 737-800 fleet which is expected to reduce fuel consumption and provide more efficient flight services throughout the country and African continent. In this regard, Airline Industry Information (2019) reports that, “The Split Scimitar Winglet System will reduce Mango’s annual fuel requirements by more than 155,000 liters per aircraft, and their carbon dioxide emissions by over 390 tons per aircraft per year” (Mango Airlines to install Aviation Partners Boeing’s split Scimitar winglets on fleet of next generation 737-800s, 2019, p. 1).

Further, the company has also partnered with the South African government, South African Airways and other interested parties to develop and deploy innovative biofuel feedstocks that can be used for commercial flight operations (Bekele, 2018). This initiative follows an especially noteworthy accomplishment in July 2016 when Mango Airlines became the first airline in the world to successfully use biofuels which were manufactured from tobacco plants (Bekele, 2018). This focus on developing sustainable, environmentally friendly alternatives to conventional jet fuels is especially significant since it represents a win-win outcome for the hard-set public and private sectors in South Africa today. As one South African government official pointed out, “Not only does the project afford environmental benefits, but it also creates job opportunities for local communities. If we want to produce aviation biofuel it has to be from local sources” (as cited in Bekele, 2018, para. 5).

Indeed, this and similar agriculture-based initiatives are particularly important for South Africa as it seeks to rebuild its tattered infrastructure and provide meaningful employment opportunities for millions of South Africans who continue to suffer from the lingering effects of apartheid despite its being outlawed nearly 30 years ago (Bekele, 2018). In fact, in the otherwise-dim South African context, Boeing’s presence represents a bright light that may facilitate the nation’s recovery in ways that can be applied to many other developing nations in Africa and beyond. While Boeing’s commercial operations in the United States and South Africa differ significantly in terms of the products and services that are manufactured and how they are used by the aerospace industry today, they share some common features which are inextricably interconnected due to the multinational nature of the company today and these issues are discussed below.

Discussion

With more than 140,000 employees, hundreds of subsidiaries in dozens of countries and business operations in more than 150 countries in Europe, the Middle East, North and South America, Africa and Asia-Pacific (see physical map at Appendix A), the company’s domestic brand is widely recognized globally and it is reasonable to suggest that Boeing is setting the pace for its several major competitors in the aerospace defense industry, including most especially SpaceX, Northrop Grumman, Lockheed Martin, Raytheon Company and General Dynamics (Boeing Company competitors and competition, 2021). Nevertheless, Boeing’s domestic and global operations also face stiff competition in the commercial aircraft industry, primarily from Airbus and Embraer (note: the company is currently trying to acquire this air carrier) but from Japan’s Mitsubishi Aircraft and Russia’s Irkut as well (Boeing Company competitors and competition, 2021).

Despite the adverse economic impact of the ongoing Covid-19 pandemic and the negative public relations fallout from its Max 737 disasters in 2018 (discussed further below), the company has managed to weather this combination of events and has even returned to a near-profitable condition in recent months (Welch, 2021). For example, for fiscal year (FY) 2020 (ended December 2020), the company posted revenues of $58,656 million, representing a significant decline of 30.8% compared to FY2019; however, by the first quarter FY2021 (ended March 2021), Boeing reported revenues of $15,217 million, representing a much more modest decline of just 3.7% compared to the previous year’s first quarter (The Boeing Company SWOT analysis, 2021). At present, most industry analysts indicate that the company is well poised to return to its pre-737 Max crash and pre-pandemic revenue levels in the foreseeable future (Welch, 2021). Indeed, this positive projection was borne out by the crush of holiday travelers in the United States over the recent Independence Day holiday weekend when record numbers of air travelers crowded the nation’s airports despite the ongoing threat from Covid-19 and its variants (Moon, 2021).