Boeing 2008 Annual Report Download - page 5

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Our management team is addressing our chal-
lenges head-on and, as we enter an increasingly
difficult 2009, I believe we are uniquely positioned
to weather the current storm — and to emerge
well equipped to deliver long-term growth and
quality financial results.
The strategy we set in motion more than a
decade ago — to create a highly capable, broadly
diversified aerospace company with a healthy
balance between the economically-sensitive
commercial airplane business and the more
stable, long-cycle defense business — remains
our great strength, especially during challenging
economic times like these.
Our near-term future depends on nothing more
(or less) than solid execution and disciplined
financial management. And we are taking exten-
sive measures to deliver on both counts. Our
long-term future holds as much promise as ever
because of the inherent size and strength of the
markets we serve, the innovation and efficiency
of the technology we bring to our customers and
the dedication, talent and inspiration of the peo-
ple we employ.
The Boeing order book is the fullest it has ever
been thanks to several exceptional years of
commercial airplane orders and steady growth in
defense contracts. At the end of 2008, our total
backlog stood at $352 billion, which is more than
five times our annual revenues in 2008. While we
anticipate fewer commercial airplane orders and
greater numbers of cancellations and deferrals in
2009 than we saw in 2008, the size and diversity
of our backlog gives us more flexibility than we
have had in the past to accommodate “orders
churn” without dramatic impact on our production
rates. However, should bolder steps be required,
we are prepared to act quickly and decisively to
balance supply with demand and our costs with
our revenues. Our defense backlog also ranks
among the largest in the industry and is balanced
across a range of new and mature production
and large scale systems integration programs.
Given these factors and setting aside the risk
of further economic weakness or larger-than-
expected adjustments in defense spending,
our biggest single task over the next few years
is to execute. It is to do everything we say we
are going to do — in designing, developing and
delivering new airplanes and other products
and services on schedule and within budget.
At the same time, we are focusing more fiercely
than ever on the twin imperatives of growth and
productivity — knowing that growth, in tough
times, is even more dependent on accelerating
efforts to improve productivity and maintain our
competitiveness in support of our customers.
Beyond that, our fundamental product-and-
services strategy remains intact. Our two core
businesses — Boeing Commercial Airplanes and
Integrated Defense Systems (IDS) — are world
leaders in broad and important markets, each with
a strong mix of products and services and with
many opportunities for synergy between them.
Together, these two core businesses are capable
of defining the state of the art in major segments
of the aerospace world for decades to come.
One of the great, enduring facts about commer-
cial aviation is that more and more people want
to fly — and more and more people will fly on
the wings of continued economic growth. Over
the past three decades, commercial airline travel
has grown at an annual compounded rate of
5.3 percent — or nearly double world GDP
growth. During that time, there have been only
three periods of contraction in global air travel —
in 1990–91 with the Gulf War, in 2001–02 follow-
ing the 9/11 terror attacks in the United States,
and today, with the global downturn that began
in the second half of 2008. Air travel rebounded
strongly the first two times and, if history is any
guide, it will do so again, setting the stage for
future commercial airplane orders.
Defense systems — our other core business —
encompasses a huge marketplace of its own.
And, even though it is subject to governmental
budgetary constraints in the present economic
environment, the defense marketplace offers a
wide array of opportunities to companies with an
exceptionally broad range of technical capabilities.
There are very few companies that answer that
description, but Boeing is certainly one of them.
Last year, we further strengthened our position
with strategic acquisitions that expand our capa-
bilities in core and adjacent markets. In addition
to being one of the largest U.S. defense contrac-
tors, Boeing has achieved strong growth and
increasing success in recent years in international
defense markets. Wins in 2008 and early 2009
included a C-17 sale to Qatar, a follow-on sale of
F-15s to the Republic of Korea and the sale to
India of the P-8I, a variant of the P-8A Poseidon,
a long-range multimission maritime patrol aircraft
that Boeing is developing for the U.S. Navy.
Industry-leading record
Boeing backlog at five
times annual revenues
provides a solid foundation
for future growth.
TOTAL COMPANY BACKLOG
$352
BILLION