Over the past several years, Boeing has repositioned its business model. Instead of focusing on defense contracts as many of its peers in the aerospace industry have done, Boeing has focused itself on commercial aircraft. This strategy has worked well, as the constant threat of budget cuts keeps a lid on defense spending in the U.S.
As a result, Boeing has taken an iron clad grip on commercial aircraft. More than two-thirds of Boeing’s $96.1 billion of 2015 revenue was generated by the commercial aircraft division. Boeing’s commercial aircraft unit posted 10% growth last year, far ahead of its military business, which saw revenue decline for the year.
Overall, Boeing grew revenue and free cash flow last year by 4% and 6%, respectively, which is a very respectable result in a slow-growth economy.
Also, keep in mind that unfavorable currency fluctuations resulting from the strong U.S. dollar held back Boeing’s growth last year.
It has performed well to start 2016 as well. Through the first half of the year, Boeing’s revenue and cash flow increased 1% and 32%, respectively, versus the same period last year. Last quarter, Boeing notched another quarter of growth in revenue, deliveries, and bookings.
This success should continue well into the future, as demand for commercial aircraft continues to rise. Its commercial aircraft deliveries set a company record last year. Going forward, global economic growth provides a tailwind for Boeing’s future deliveries. Boeing’s order backlog stands at nearly $500 billion.
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