Monday, July 31, 2017

Boeing Creates New Avionics and Electronics Unit: New unit will target core systems including navigation, flight controls

The Wall Street Journal 
By Doug Cameron
Updated July 31, 2017 4:26 p.m. ET

Boeing Co. is creating a new unit to develop and build aircraft avionics systems, expanding its strategy of insourcing key technology to cut costs.

The new Boeing Avionics unit will expand the aerospace company’s existing offering of electronics systems, focusing on areas such as navigation and flight controls for future commercial and military jets.

The move, announced in a memo to staff Monday, takes Boeing deeper into the territory of big suppliers such as Rockwell Collins Inc. and Honeywell International Inc. following the recent expansion of its services business.

While Boeing Avionics will focus on equipment for future products entering service over the next decade, it could also be used to produce more advanced parts for existing aircraft currently supplied by third parties.

Boeing said the avionics business had been established in consultation with suppliers.

Shares in Rockwell Collins extended an early decline and were recently down more than 6%. A spokesman said it didn’t expect any impact from Boeing’s move in the “foreseeable future,” and said they would continue to work collaboratively.

With most aerospace sector shares down, Boeing shares continued the advance that has lifted the stock by more than 20% in July, buoyed by a firmer outlook for cash and profits.

Chicago-based Boeing already produces a range of aircraft electronics, and the new unit will have an initial staff of 120, growing to an expected 600 by 2019.

The company is pursuing more vertical integration of its aircraft manufacturing business, standing up internal operations in areas such as advanced materials, propulsion systems and actuators, which move the flaps on a jet’s wings.

Boeing Avionics will be headed by Allan Brown, a senior defense executive, reporting to Chief Technology Officer Greg Hyslop.

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