Boeing Focuses On Military

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Boeing appears to be banking its financial future on U.S. defense contracts as the market for airliners continues to lag. Meanwhile, problems are looming for Airbus and they could give Boeing back its competitive edge. An MSNBC analysis shows a major boost in defense contracts has helped Boeing compensate for the drastic loss of business on the commercial side. In Europe, the powerful euro is bringing Airbus to its knees. In 1999, airliners accounted for two-thirds of Boeing’s $58 billion in revenue. Last year, the commercial jet business provided barely half of Boeing’s income and a 9.4 percent spike in defense business filled the gap. The report also points out proposed deals like a lease arrangement, worth $17 billion, to outfit Boeing 767s as tankers and the possibility of government support to secure and enhance space and satellite systems. Airbus is gamely trying to compete for the tanker business and has even opened an office in Wichita, but the report says there’s no realistic chance of the European company’s winning any major U.S. defense contracts. The poor economy in the U.S. has been a double whammy for Airbus. The U.S. dollar has weakened significantly against the euro in recent months Airbus sells aircraft in dollars but about half of its costs are in euros, so the weak American dollar is giving a financial advantage to Boeing in areas, like commercial jets, where the two compete.

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