Boeing Might Be Selling Defense Subsidiary Amid Crisis

Boeing is contemplating divesting a minor defense subsidiary specializing in surveillance equipment for the US military and intelligence community, Breaking Defense has learned.

Boeing has enlisted financial advisors to explore potential purchasers for its Digital Receiver Technology Inc. (DRT) business, as well as to assess interest in undisclosed defense programs within Boeing’s aftermarket business division, as reported earlier today by Bloomberg, citing sources familiar with the matter.

Sources with insight into the discussions informed Breaking Defense that talks about selling DRT have been ongoing for approximately a year, predating the aerospace company’s involvement in a reputational crisis following an incident in January where a door plug detached from a Boeing 737 MAX aircraft mid-flight.

Boeing declined to comment.

Boeing acquired DRT, headquartered in Germantown, Md., in 2008, as part of its efforts to expand into the intelligence sector. DRT, purchased for an undisclosed sum, specializes in manufacturing wireless receivers and transceivers.

Aerospace expert Richard Aboulafia from AeroDynamic Advisories suggested that the sale of DRT is unlikely to significantly impact Boeing financially.

Boeing has been grappling with a $39 billion debt burden and may encounter further financial challenges as it mulls re-acquiring Spirit AeroSystems, a former Boeing spin-off specializing in producing major fuselage components for Boeing and Airbus commercial jets.

Aboulafia noted that divesting DRT could be a routine shedding of a non-core business. Any potential sale of defense-related aftermarket activities would likely pertain to maintaining outdated aircraft that contribute minimally to Boeing Global Services’ profitability, Aboulafia added.

However, these moves could pave the way for broader changes within Boeing’s defense sector, Aboulafia suggested.

“The larger question is, why? Unless it’s the precursor to a broader series of divestitures, which has been my suspicion for some time.

These executives don’t seem interested in doing actual work; they just want to break up the company,” he remarked, referring to Boeing’s executive leadership.

For the past year, Boeing and Lockheed Martin’s conglomerate, United Launch Alliance, have reportedly been seeking new ownership.

The Wall Street Journal disclosed in December that bids from Jeff Bezos-owned Blue Origin and private equity firm Cerberus had been submitted to acquire the rocket manufacturer, which competes with SpaceX for national security launch contracts.

Moreover, Bloomberg reported that Boeing had considered divesting Argon ST, a subsidiary specializing in sensors and communications systems, but had halted the process for the time being.

Josh Alba
Josh Alba
Josh Alba stands at the forefront of contemporary business journalism, his words weaving narratives that illuminate the intricate workings of the corporate world. With a keen eye for detail and a penchant for uncovering the underlying stories behind financial trends, Josh has established himself as a trusted authority in business writing. Drawing from his wealth of experience and relentless pursuit of truth, Josh delivers insights that resonate with readers across industries.
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