“There is a possibility that the revenue could continue to shrink,” Colbert said in a July 9 interview. “But we want it to be healthy revenue. That is the most important thing in this industry, to have healthy revenue and support the mission of our customers.”

Colbert’s definition of “healthy revenue” emphasizes pursuing reliably profitable ventures over risky fixed-price contracts. Currently, fixed-price contracts represent 15% of BDS’s sales portfolio, resulting in $13.4 billion in losses since 2014. Transitioning to a healthier portfolio, however, poses significant challenges due to ongoing delays in several key programs.

Challenges and Opportunities

BDS faces delays in three out of five fixed-price programs—MQ-25, T-7, and VC-25B—expected to extend developmental phases by 2-4 more years. Additionally, the KC-46 program struggles with issues related to its remote vision system and refueling boom. Meanwhile, NASA’s Starliner is under scrutiny for faulty thruster software as it prepares for its first crewed spaceflight to the International Space Station.

In the medium term, BDS aims to attract sales through new programs, such as the Orca, the potential first production extra-large uncrewed undersea vehicle for the U.S. Navy. Other opportunities include selling derivatives of existing programs, like a light attack version of the T-7 trainer or a reconnaissance-strike variant of the MQ-25.

Boeing is also heavily invested in the Next-Generation Air Dominance (NGAD) programs by the Air Force and Navy. The company has started constructing a $1.8 billion Advanced Combat Aircraft Facility in St. Louis to bolster its bid for these contracts, despite the uncertainty surrounding program funding.

“In order for us to be attractive to our customer, we’ve got to demonstrate the capacity and capability to deliver on their mission,” Colbert emphasized. However, budgetary pressures have led to proposed cuts in NGAD funding, posing further challenges for Boeing.

Strategic Adaptation

Colbert remains optimistic, attributing the funding cuts to budget constraints rather than changes in performance requirements. “We know our adversaries have invested tremendously in some of these areas. So I have a hard time thinking our customer would want to be at a disadvantage,” he said.

Boeing plans to stay competitive in the development of a new generation of Collaborative Combat Aircraft for the Air Force and Navy, despite losing a bid for the Increment 1 system. Colbert highlighted the importance of autonomy in future defence strategies, signalling Boeing’s continued interest in this area.

Expansion and Acquisitions

With limited opportunities to develop new military platforms, Boeing is also focusing on growth as a subcontractor. BDS supplies seekers to Lockheed Martin for the Patriot Advanced Capability-3 system and satellite buses to payload integrators. Additionally, Boeing recently announced an agreement to acquire Spirit AeroSystems, an aero structures supplier that Boeing had spun off in 2005. This acquisition could enhance Boeing’s subcontracting capabilities, although its impact on existing roles remains uncertain.

“I can’t speak to it at this point because the deal is not done,” Colbert said. “And it’s frankly up to Spirit and their customers to decide what they do until it becomes ours.”

As Boeing navigates these strategic changes, the focus remains on achieving healthy revenue and supporting customer missions, positioning BDS for sustainable growth in a challenging market.