Written by Norman Isaac Mwambazi

Boeing in Focus: 5 companies owned by Boeing

Boeing Co. (ticker: BA) is one of the largest aerospace companies in the world, accounting for over 38% of the …

Boeing Co. (ticker: BA) is one of the largest aerospace companies in the world, accounting for over 38% of the total commercial and military aircraft in the world. In addition to aerospace, Boeing also develops and manufactures weapons systems, strategic defence and intelligence systems, as well as financing for orders and deliveries.

That said, Boeing operates four business segments: Commercial Airplanes; Boeing Capital, Defense, Space & Security and Global Services. Because its Commercial Airplanes segment brings in the biggest chunk of Revenue, Boeing’s finances were affected by the COVID-19 pandemic in the 2020 Fiscal Year (FY2020) as it registered a net loss of $11.9 billion on revenue of $58.2 billion. The company was also affected by the grounding of its bestselling aircraft, Boeing 737 MAX after several crashes.

However, the Chicago-headquartered company has recovered this year as more international travel is opened, with its stock gaining 9.19% year to date, and it currently has a market capitalisation of $129.74 billion.

The company that we know now as Boeing was founded in 1916 by William Boeing as Pacific Aero Products Co, but this name was changed by the founder to Boeing Airplane Co in April 1917. As one of the biggest aerospace companies in the world, Boeing’s biggest rival in the skies is Airbus SE (ticker: AIR) and to stay on par with the competition, the company has made top dollar acquisitions over the years, taking over rival companies whose growth had stunted or were going through tough financial times. These acquisitions, which have been centred around the company’s core business segments of aerospace and defence have dramatically increased the size of Boeing, as some come with big government contracts.

Apart from aerospace rivals, Boeing has also acquired companies with the sole purpose of boosting its ability to supply parts, products, and services to its commercial and military clients. Here are the five companies that Boeing owns through acquisitions.

McDonnell Douglas Corporation

Formed in April 1967 as a merger between McDonnell Aircraft Corp. and The Douglas Co., McDonnell Douglas Corporation was acquired by Boeing on August 1, 1997, for $13.3 billion. By the time it was acquired, McDonnell Douglas’ core business activities were the development and manufacturing of aerospace, commercial and military avionics, defence electronics, and research. Boeing took advantage of the fact that the company was struggling in the commercial aircraft business and after the acquisition, Boeing accounted for 60% of the global market for large commercial jetliners at the time. Commentators say that this acquisition also shifted Boeing’s focus from maintaining its engineering excellence to short-term financial gain.

Rockwell International Corporation

Just like the previous company, Rockwell International Corporation is also a product of a merger that happened in 1967 between North American Aviation and Rockwell-Standard Corporation with the resulting company being named North American Rockwell Corp. The company changed its name to Rockwell International in 1973 and its aerospace and defence units were acquired by Boeing on December 10, 1996, for approximately $3.1 billion and Boeing named the new subsidiary Boeing North American.

Rockwell’s two segments that were acquired by Boeing made space shuttles, space systems, missiles, aircraft parts, sensors, and other weapons, and they were a big boost to Being’s defence and aerospace businesses adding the much-needed space, information and battle management systems to Boeing’s array of products.

Hughes Electronics Corporation

In 1985, automaker General Motors Corporation (ticker: GM) formed a subsidiary called GM Hughes Electronics to provide telecommunication services and manufacture satellites. The company’s space and communications businesses were acquired from General Motors Corp. by Boeing at the turn of the century with the deal worth $3.8 billion announced on January 13, 2000, and closed on October 6, 2000.

After the acquisition, Boeing integrated Hughes’ space and communications business units into a new business segment that was named “Boeing Satellite Systems”, and this made Boeing the world’s largest producer of commercial communications satellites. The acquisition worked to the advantage of Boeing as it boosted the company’s space-related revenues and paved the way for Boeing’s growth prospects in IT products and services right at the time internet usage was penetrating every section of the globe. In the next 10 years after this acquisition, Boeing would identify these businesses as “key areas of growth.”

Aviall Inc.

In the early 1930s, three companies that were dealing in aircraft service and parts supply merged to form what is now Aviall Inc. Being acquired Aviall Inc. on September 20, 2006, in a deal worth $1.7 billion, and the deal meant that Boeing had the world’s largest independent provider of new aviation parts like batteries, wheels and brakes and hoses, and related aftermarket services like aircraft painting on its books as a wholly-owned subsidiary.

Aviall Inc. is operating under Boeing’s Commercial Aviation Services segment and it offers a broad range of value-added products and services to Boeing’s commercial and military clients.

KLX Inc.

This is the latest addition to Boeing’s growing wholly-owned companies. In 2014, B/E Aerospace Inc. spun off its consumables and management segment, a decision that paved way for KLX Inc. to become an independent, publicly-traded company. KLX went on to become a major provider of new aviation parts and aftermarket services, something that certainly attracted the deep pockets of Boeing, acquiring the company on October 9, 2021, in a deal worth $4.25 billion. This was the biggest acquisition for Boeing in almost 20 years.

At the time of the acquisition, KLX Inc. was employing 2,000 employees and ran customer service centres in more than 15 countries, as well as marketing and distributing products to approximately 2,400 manufacturers.

KLX’s acquisition greatly strengthened Boeing’s position within the aerospace services market as it enabled Boeing to offer larger discounts to airlines and it also offered Boeing the prospect of higher profits. The aircraft services business, which is worth a respectable $2.8 trillion presents relatively higher profit margins to aerospace companies.