Boeing may restructure by spinning off units

The US-based aerospace group, Boeing, is contemplating fundamental changes with the aim of turning the large, some say unwieldy, group into a broad-based aerospace and defence products and services group, with a target turnover of $400 billion.

As part of this exercise, Boeing is considering spinning off some of its high-growth businesses, including parts of its satellite and communications arm and its air traffic management unit. The company is said to be discussing a number of options for the group businesses, including issuing tracking stocks and obtaining separate stock market listings.

According to Phil Condit, chairman and chief executive of the company, the market values of the groups' satellite business are higher than our traditional aircraft business.

Early last month, Boeing heralded a 'new era' for the company by announcing the formation of three new business divisions -- Connexion by Boeing, air traffic management and financial services.

Connexion by Boeing, the company's satellite technology division, will offer internet access, live TV broadcasts and online shopping to airliners. Harry Stonecipher, president of Boeing, hopes to make this division's service the 'Yahoo of the air'. The company is also seeking airline partners to develop and market the service. 

Earlier this year, Boeing had purchased the communications satellite business of Hughes Electronics for $3.75 billion. This purchase has, besides making it the world's largest space technology company, helped it acquire key technology for large-scale data transfer via satellites. Boeing is very keen to tap the developing satellite communications market, which is projected to grow to $120 billion by 2010.

While analysts do not expect Boeing to spin off the entire satellite and communications division, they do believe that the company is more likely to separate high growth activities such as Connexion by Boeing.