Boeing CEO To Suppliers: Share The Pain

By Joseph C. Anselmo , Guy Norris
Source: Aviation Week & Space Technology

The F-35 has faced a lot of cost and schedule challenges. Does that open the door for Boeing's F-18 and F-15?

I'm not going to pile on the F-35. Believe me, I know how difficult new programs are. But as the schedule moves to the right, it opens up opportunities for proven [fighters] where prices are coming down, delivery dates are certain and capabilities are continuing to improve. I think there's a serious evaluation by the U.S. Navy about how to deploy more F-18s within the current F-35 schedule.

Boeing must execute on the U.S. Air Force tanker contract. Does this give you any sleepless nights?

No. We signed up for a program we thought we could do. The contract structure presents some risk if we [don't perform]. But we're hitting all the benchmarks and things are on track.

How does sequestration [automatic U.S. budget cuts that took effect March 1] affect the tanker program? Is there any danger you'll have to renegotiate the contract?

That is a low probability. The customer has made it very clear they don't want to. I think Congress has made it clear that they don't want to see that now. Time will tell, but it would be very difficult for us to step back and negotiate some other type of contract.

Your defense business has posted some pretty good margins. Can those hold up as sequestration starts to bite into programs?

We are sizing our business, cost-wise, to maintain our margins. That has necessitated some regrettable and very difficult actions on people, structures and sites, but we're going to keep making them. Based on what we see today, we think we can hold on to our margins.

How do you see Boeing's split between commercial and defense sales changing?


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