Anyone participating in a Boeing results or investors’ presentation can’t fail to notice that the company’s global services segment gets barely any attention. Yet with revenue of $17.6 billion and positive earnings from operations, Boeing Global Services (BGS) accounted for nearly 30 percent of the U.S. aerospace giant’s total revenue and nearly all its operating profits last year.
BGS’s financial performance clearly outshines that of its more well-known peer segments, Commercial Airplanes (BCA) and Defense, Space, and Security (BDS). In 2022, BGS reported a 15.5 percent operating margin while both BCA’s and BDS’s operating margin ended in negative territory, specifically 9.2 percent and 15.3 percent, respectively. With a 17.9 percent operating margin in the first quarter of this year, the services segment exceeded pre-pandemic margins and again represented Boeing’s only profitable business segment. BGS received $4 billion in orders during the quarter and the backlog stood at $19 billion. Revenue totaled $4.7 billion, up 9 percent year-over-year. “We're set up very well to deliver a mid-single-digit revenue growth business with mid-teens margins and a high cash flow conversion,” commented Boeing CFO Brian West. “We get more and more confident about that business and the team that's running this, so I think it's going to accrue to our benefit over the next several years. We love the service business, right? It's a franchise, it goes on for years and years and years.”
BGS formed in 2017 with the integration of the OEM’s commercial, defense, and space services capabilities. Its global portfolio spans parts and distribution services, engineering, modifications and maintenance, training support, and digital analytics. The parts and distribution business remains the largest revenue contributor, but the digital solutions and analytics business has increasingly expanded, owing to the growing need to collate, share, and integrate data across subsegments, BGS executives told AIN during a briefing at the company’s offices in Frankfurt, Germany, ahead of the Paris airshow.
BGS employs some 450 staff at the Frankfurt site, which formerly printed up to 1 billion Jeppesen navigation charts a year. That same building now serves as home to BGS’s largest Digital Solutions & Analytics Lab.
“Jeppesen stands as one of the first successful digital transformations in the world,” remarked Brad Surak, BGS vice president of digital aviation solutions. For Surak, Jeppesen—which Boeing acquired in 2000 for $1.5 billion in cash—is the “Google Maps of aviation navigation,” offering a 99.92 percent accuracy. Almost 80 percent of pilots use the so-called “Jepps” regardless of the airframe they fly. Users have downloaded the Jeppesen FliteDeck Pro, the navigation app providing digital charts, maps, and documents, on more than 350,000 mobile devices.
The transition from paper charts to the Jeppesen's electronic flight bag (EFB) serves as a perfect example of BGS’s “double bottom line” approach, noted Surak. “We are not just aiming to improve financial results but want to achieve an outcome that enables airlines to make strides in operational efficiency and their sustainability targets,” he explained. Since its launch in 2012, the Jeppesen EFB enabled more than 40,000 paperless flights and removed 6.3 million kg of paper from airplanes, resulting in 271,500 tonnes of fuel savings and avoiding almost 900,000 tonnes of CO2 emissions.
Following its success in establishing a seamless paperless flight deck, BGS has expanded its digital aviation products to help airlines transition to a fully integrated operations center. “The operations center is the nerve center of the airline, but we see that [legacy] airlines often have seven to 10 different solutions, and these systems operate in silos,” according to Surak. Integrating the systems for core capabilities such as flight planning, flight scheduling, tail assignment, crew management, communication, and operations control in one inter-connected digital suite will improve the integrity of day-to-day operations and enable airlines to quickly recover from disruptions, he maintained.
In a subsequent step, the Boeing Integrated Operations Center (IOC) will join with maintenance, Surak said, highlighting that the IOC suite is fleet agnostic and customizable based on the airline’s operational requirements.
Data analytics also is improving pilot training and aviation safety, asserted Chris Broom, Boeing Global Services’ vice president of commercial training solutions. The Boeing 737 Max crashes prompted the airframer to move towards competency-based training and assessment (CBTA) for instructors and pilots. “We are rolling out a five-year plan to move all our fleets to CBTA,” Broom said. Some 20 aviation safety regulators have approved the CBTA flight training manuals and programs for the airframer’s single-aisle 737 family—excluding the Max 7 and 10 variants, which remain in the process of winning FAA approval—and two have approved the Boeing 787 program, according to Broom.
Anyone participating in a Boeing results or investors’ presentation can’t fail to notice that the company’s global services segment gets barely any attention. Yet with revenue of $17.6 billion and positive earnings from operations, Boeing Global Services (BGS) accounted for nearly 30 percent of the U.S. aerospace giant’s total revenue and nearly all its operating profits last year.
BGS’s financial performance clearly outshines that of its more well-known peer segments, Commercial Airplanes (BCA) and Defense, Space, and Security (BDS). In 2022, BGS reported a 15.5 percent operating margin while both BCA’s and BDS’s operating margins ended in negative territory, specifically 9.2 percent and 15.3 percent, respectively. With a 17.9 percent operating margin in the first quarter of this year, the services segment exceeded pre-pandemic margins and again represented Boeing’s only profitable business segment. BGS received $4 billion in orders during the quarter and the backlog stood at $19 billion. Revenue totaled $4.7 billion, up 9 percent year-over-year. “We get more and more confident about that business and the team that's running this, so I think it's going to accrue to our benefit over the next several years. We love the service business...It's a franchise,” commented Boeing CFO Brian West
BGS formed in 2017 with the integration of the OEM’s commercial, defense, and space services capabilities. Its global portfolio spans parts and distribution, engineering, modifications and maintenance, training support, and digital analytics with names such as Jeppesen, ForeFlight, and recent acquisitions such as CloudAhoy. The parts and distribution business, including the former Aviall, remains the largest revenue contributor, but the digital solutions and analytics business has increasingly expanded, owing to the growing need to integrate data across subsegments, BGS executives told AIN during a briefing at the company’s offices in Frankfurt, Germany, ahead of last month’s Paris Airshow.
BGS employs some 450 staff at the Frankfurt site, which formerly printed up to 1 billion Jeppesen navigation charts a year. That same building now serves as home to BGS’s largest Digital Solutions & Analytics Lab.
“Jeppesen stands as one of the first successful digital transformations in the world,” remarked Brad Surak, BGS vice president of digital aviation solutions. For Surak, Jeppesen—which Boeing acquired in 2000 for $1.5 billion in cash—is the “Google Maps of aviation navigation,” offering a 99.92 percent accuracy. Almost 80 percent of pilots use the so-called “Jepps” regardless of the airframe they fly. Users have downloaded the Jeppesen FliteDeck Pro, the navigation app providing digital charts, maps, and documents, on more than 350,000 mobile devices.
The transition from paper charts to Jeppesen's electronic flight bag (EFB) serves as a perfect example of BGS’s “double bottom line” approach that also includes sustainability, noted Surak. Since its launch in 2012, the Jeppesen EFB enabled more than 40,000 paperless flights and removed 6.3 million kg of paper from airplanes, resulting in 271,500 tonnes of fuel savings and avoiding almost 900,000 tonnes of CO2 emissions.
Following its success in establishing a seamless paperless flight deck, BGS has expanded its digital aviation products to help airlines transition to a fully integrated operations center. “The operations center is the nerve center of the airline, but we see that [legacy] airlines often have seven to 10 different solutions, and these systems operate in silos,” according to Surak.
Integrating the systems for core capabilities such as flight planning, flight scheduling, tail assignment, crew management, communication, and operations control in one inter-connected digital suite will improve the integrity of day-to-day operations and enable airlines to quickly recover from disruptions, he maintained. In a subsequent step, the Boeing Integrated Operations Center (IOC) will join with maintenance, Surak said.
Data analytics also is improving pilot training and aviation safety, asserted Chris Broom, Boeing Global Services’ v-p of commercial training solutions. The Boeing 737 Max crashes prompted the airframer to move towards competency-based training and assessment (CBTA) for instructors and pilots. “We are rolling out a five-year plan to move all our fleets to CBTA,” Broom said.