The controversial KC-X aerial tanker procurement will likely be deferred, predicts Goldman Sachs. So will several other Boeing programs, according to Goldman: the Airborne Laser, the Ground-Based MidCourse Missile Defense System and the Boeing/SAI Future Combat Systems.
Goldman made the predictions during an investor’s conference call today (Jan. 12). The company believes the incoming Obama administration will defer these and other defense programs as it adjusts priorities within the Defense Department and as part of its overall economic recovery plan.
Goldman does not predict that overall defense spending will fall; on the contrary, the firm believes that defense spending will be maintained or increased.
President-elect Obama said during the presidential campaign that the Armed Services need to be modernized and replenished after years of spending on the Iraq War, and that troops need to be redeployed to Afghanistan to continue the fight against terrorists and to get Osama Bin Laden.
The Orlando Sentinel quotes an analyst with Global Security as saying the KC-X isn’t needed at all.
Boeing last week (Jan. 8th) announced internally a reorganization of its flight test department across Boeing Commercial Airplanes (BCA) and Integrated Defense Systems (IDS) that consolidates all flight testing into one organization.
The move will have several benefits, according to an e-mail sent to all employees of the Flight Operations, Test and Validation employees. The reorganization will:
- Streamline infrastructure;
- Create economies of scale;
- Increase visibility and cost control;
- Create more efficient use of people, resources and assets;
- Accelerate implementation of standard systems, processes, tools and training;
- Bring Boeing one step closer to the goal of operating as “one company.”
Boeing hopes to reduce costs of flight testing by 10%, saving hundreds of millions of dollars annually. These costs currently represent 20%-25% of the total cost of new airplane development, Dennis O’Donoghue, vice president of the department, said in the e-mail. He will head the effort to consolidate the flight testing, which is current spread across 28 sites.
O’Donoghue wrote that full integration is hoped for by the end of the third quarter this year.
The effect, if any, on Boeing’s delayed 787 program is unclear. Flight testing is to begin perhaps as soon as late April but may be in May, June or early third quarter, depending on a wide array of variables and unknowns in the completion of airplane #1 and subsequent test planes. (More after the jump.) Read more…
