2010/06/05

Boeing looks to Asia for overseas defence business

SINGAPORE, June  4, 2010 (AFP) - Boeing wants to expand its defence business outside the United States as it moves to compensate for Washington's cuts in defence spending, a leading executive said Friday.

Dennis Muilenburg, president and chief executive of Boeing Defense, Space and Security, said the aerospace giant aimed to sell more fighters such as the F-15 and F/A-18 Super Hornet, airlift planes and unmanned systems in Asia.

The international market now accounts for about 16 percent of Boeing's total annual defence revenues of 34 billion dollars and the company plans to expand this to 20-25 percent in the next five years, Muilenberg said.

The Asia-Pacific now contributes half of non-US revenues, he told reporters in Singapore, where he was attending a security forum.

"We've seen some flattening in the US defence budget and that has impacted us in a couple of areas like missile defence," he said.

"As we see our international business growing to roughly 25 percent of our business, the Asia fraction of that will grow a little above 50 percent just because of the market here and the opportunities that we see."

With demand for its main products remaining robust, the company is expanding into other businesses such as unmanned systems, computer systems security and protection for electrical power grids.

It is also expanding its business outside the US military and looking for more contracts in countries such as India, Singapore, Australia, South Korea and Japan, Muilenburg said.
"Our international business segment is a strong growth area," he added.

The need for new aircraft in humanitarian relief missions and disaster  rescue is driving demand for its Chinook helicopters and C-17 military transport planes, he said.

India has signed a deal to buy eight P8i anti-submarine aircraft from Boeing and has expressed an interest in purchasing 10 C-17 military transport aircraft.

Boeing is also one of several companies battling for a contract, worth almost 12 billion dollars, to supply 126 fighter jets to the Indian air force.

Boeing is touting its F-18 "Superhornet" while another US firm, Lockheed Martin, is offering the F-16. The other rivals include European, Russian, French and Swedish contractors.

Boeing's F-15s are key elements in several Asian air forces, including in South Korea, where tensions with its communist northern neighbour are rising after the sinking of a South Korean warship in March.

A multinational investigation team concluded last month that a North Korean submarine torpedoed the Cheonan, killing 46 sailors, and prompting Seoul to announce a series of reprisals.

Muilenburg said Boeing would continue to provide South Korea with its defence needs.

"It's an honour and privilege for us to support them and we continue to provide that support even in the current dymamic environment," he said.

Boeing in 2002 won a contract to supply South Korea with 40 F-15 fighter jets in a deal worth more than four billion dollars.

"We see our role as wanting to make sure that we're meeting our commitments and that we're delivering on our promises to that very important customer," said Muilenburg.

Singapore has also chosen Boeing to supply its air force with 24 F-15s.