| The human space flight
and exploration market is forecasted to be relatively flat over the next ten years.
This forecast is based on budget projections for NASA, the primary customer in
this market. As NASA’s new administration focuses on resolving the near-term
budget issues, developing a strategic vision, and setting goals for the agency,
the Company is well positioned as NASA’s single largest contractor. Significant
progress was made in the assembly of the International Space Station (ISS) over
the past year as it reached a milestone of one full year of continuous human presence.
NASA’s near-term focus will remain on ISS, for which the Company is the prime
contractor. NASA awarded a contract to Boeing to support continuing operations
and utilization of ISS in December 2001. The Space Shuttle continues to be the
only U.S. vehicle to support human space access, and the Company plays a key role
in Shuttle operations and maintenance through United Space Alliance, the Company’s
joint venture arrangement with Lockheed Martin. NASA is expected to pursue future
funding for long-term space exploration once the ISS has been assembled. |
| Funding for the missile defense market is primarily driven by U.S. Government
development and procurement budgets. Market components include national missile
defense and theater missile defense weapons and system-of-systems solutions. The
Company’s prime contractor role on the Ground-Based Midcourse Defense program
will continue to demonstrate the Company’s ability to provide a system-of-systems
solution for national defense. In addition, the Company has been named the leader
for overall Missile Defense System Integration. Accomplishments on the PAC-3 (Patriot
Advanced Capability missile) program, and the Theater High Altitude Area Defense
program have established the Space and Communications segment as a major participant
in the missile defense market. |
| Customer
and Commercial Financing Business Environment and Trends |
| Customer
and Commercial Financing segment consists primarily of the operations of Boeing
Capital Corporation (BCC), which acts as a captive finance subsidiary for the
Company. BCC provides market based lease and loan financing primarily to airlines
who purchase or lease the Company’s commercial aircraft. BCC competes for
aircraft finance business with other finance companies, commercial banks, and
other financial institutions. |
| BCC also competes in the commercial
equipment leasing and finance markets, primarily in the United States, against
a number of larger and many smaller competitors, including other leasing companies
and financing institutions. Approximately 30% of BCC’s business comes from
this market. The type of equipment leased includes corporate aircraft, machine
tools, ocean-going vessels, and production facilities. Leasing accounts for approximately
30% of domestic capital expenditures which are expected to grow consistently at
an annual rate of approximately 8%. New business volume of BCC is funded with
debt obtained in the capital markets to which it has access as well as cash from
operations and contributions from its parent company. |
| Value
Creation |
| New Product Development |
| The Company continually evaluates opportunities to improve current aircraft
models, and assesses the marketplace to ensure that its family of commercial jet
aircraft is well positioned to meet future requirements of the airline industry.
The fundamental strategy is to maintain a broad product line that is responsive
to changing market conditions by maximizing commonality among the Boeing family
of commercial aircraft. Additionally, the Company is determined to continue to
lead the industry in customer satisfaction by offering products with the highest
standards of quality, safety, technical excellence, economic performance and in-service
support. |
| The Company continues to invest in the development
of the Delta IV expendable launch vehicle. The Sea Launch joint venture offers
automated commercial satellite launches from a seagoing launch platform. These
products give the Space and Communications segment greater access to a portion
of the launch market that was previously unavailable with the Delta II rocket
alone. The Company also continues to invest in the development of the Airborne
Early Warning & Control systems platform. These investments will also provide
leverage in the development of other information, communication and battle management
applications. |
| The Company is also investing in the development
of the 767 Tanker program. This program represents a large opportunity to provide
state of the art tanking capabilities to our potential domestic and international
customers. It demonstrates the synergistic value of the diversified Boeing portfolio
in providing best value solutions to our customers. |
