US Military budget improves Boeing profitability

Implications: - Boeing is performing better than direct competitor Airbus in the civilian market, where B777s and B787s are winning competition over the A350 and where B747ng is also promising better than A380;
- In the military market, Boeing is benefiting from improvement of US military budget;
- MRO business and aircraft conversions (from passenger to cargo, i.e.) is also growing as well.

Analysis: The market competition between Boeing and Airbus, which saw the European provider taking the share leader in the past couple of years, is now turning to Boeing, most definitely in terms of value generation per transaction. In the wide-body segment, new models like the 777-300ERs are taking the lead as they prove to be much more economical than 4-engined A340s. Moreover, the new incoming B787, also named Dreamliner, although probably experiencing some delays in the first deliveries, is proving to be a blockbuster in sales, whilst Airbus faces significant problems with its A350. A350's initial project has been rejected by carriers and new R&D investments have been needed to Airbus in order to remarket this model, with current marginal sales results, however.
The competition now turns to be tough in the selection for the new air tanker for USAF, where Boeing proposes its K767 and Airbus, in partnership with Northon, offer its KC30, a derived version of the civilian A330.
Eventually, the increase in the military expenses from the US Administration has favoured Boeing for both aircraft, rotors and other related devices, including the post-sale and MRo activity, which is turning to be increasingly outsourced by armies to civilian contractors.