Boeing’s history with Nasa’s space programme stretches back to the Apollo missions of the 1960s that cemented US dominance among the stars. Now, a shifting competitive landscape and a black eye from stranding two astronauts at the International Space Station are raising a once-unthinkable question: should the company exit the business?
Nasa officials announced last month that astronauts Barry “Butch” Wilmore and Sunita “Suni” Williams would be returning to Earth aboard a SpaceX spacecraft next year rather than the Boeing CST-100 Starliner that carried them to the space station in June, their planned eight-day mission lengthening to eight months.
Nasa administrator Bill Nelson said he had talked to Boeing’s new chief executive Kelly Ortberg, and was “100 per cent” sure that the company would fly Nasa missions again.
But Ortberg has walked into a company in crisis, and his first priority is to turn around Boeing’s commercial planes business. Space is “a bit of a distraction in the portfolio” of commercial and military aircraft, said Todd Harrison, a senior fellow at the American Enterprise Institute. The company may not be ready to sell yet, but “it’s not out of the realm of possibility”.
“This is not core to Boeing’s business,” he said. “They’ve got to ask themselves, ‘How does the Boeing space business benefit the rest of Boeing?’, and I think the answer to that is, ‘Not much.’”
Boeing declined to comment on whether it would consider selling its space business. In a letter to employees last month, Ortberg said the company must focus on returning the uncrewed Starliner safely to Earth.
“We are often defined most by how we show up in times of change or challenge — and this is an important moment for us,” he said. On Friday evening the Starliner undocked from the space station and began its return journey to Earth.
Boeing has been dealing with high-profile problems in its commercial business for years, beginning with a design flaw on the 737 Max that caused two fatal crashes in 2018 and 2019. The Covid-19 pandemic disrupted airlines’ demand for jets, and when it returned, the aerospace supply chain had grown less reliable and many highly skilled senior workers had been replaced by less experienced hires. In January, a door panel blew off a jet mid-flight, forcing Boeing to re-examine its manufacturing and quality processes under the glare of regulators and lawmakers.
But Boeing has also struggled in its defence contracting and space business, which reported losses in 2022 and 2023. The losses largely stem from the 15 per cent of its defence business that is tied to fixed-price contracts, where the company has recorded $14bn in charges over the past decade.
That includes $1.5bn in charges on Starliner, a space capsule launched atop a rocket built by United Launch Alliance, a joint venture between Boeing and Lockheed Martin. While “the implications of the empty spacecraft return are [to be determined]”, said Jefferies analyst Sheila Kahyaoglu, the uncrewed return will contribute to Boeing’s defence business using an estimated $2bn in free cash this year and $1.4bn next year.
So far SpaceX has completed eight crewed missions to the space station, and Boeing has not finished any. With the space station scheduled to be decommissioned in 2030, Boeing is running out of time to complete the scheduled six missions it has under contract with Nasa.
The defence business brought in nearly $25bn in revenue in 2023. Space accounted for about a quarter of that division’s sales in 2016, the last year for which the company provided that level of detail, and it is probably a smaller portion of the whole today, said Rob Spingarn and Scott Mikus, analysts at Melius Research. At the time, it represented about 7 per cent of the company’s overall revenue.
Boeing’s space business includes launching satellites, as well as Starliner and the joint venture launch business. It is losing market share on satellites to SpaceX, Harrison said. The satellite business has changed in the past five years, switching to satellites in low orbit, which is about 400 miles above Earth, rather than placing satellites in geostationary orbit, 22,000 miles above the planet. The low-earth satellites work better because they receive a signal from Earth faster because they are closer, and they are cheaper to launch.
Gauging SpaceX’s profitability is impossible, given that it is a private company backed by a billionaire, said Clayton Swope, the deputy director of the Aerospace Security Project at the Center for Strategic and International Studies. But other companies besides Boeing, including Viasat and Intelsat, also are losing market share to Elon Musk’s company and its dominance with low Earth orbit satellites.
The competitive landscape “has fundamentally changed,” Harrison said. AeroDynamics Advisory analyst Richard Aboulafia summed up Boeing’s difficulties in space more bluntly: “There’s a big new gorilla, and it’s not them.”
But if Boeing wanted to sell its space business, it would need to find a buyer, and that could prove difficult, experts say. More likely is that it might sell parts of it, Spingarn said. The company is looking to sell its launch business, which could net between $2bn and $3bn, Mikus said, but finding a buyer for the rest depends on profits. Boeing declined to comment on whether it would sell the joint venture.
“You’re not going to find a buyer for a bunch of contracts that are losing money,” Mikus said.
What Nasa fears is that Boeing will cancel the Starliner programme, Harrison said. The space agency contracted with both Boeing and SpaceX for its commercial crew programme so neither company would have a monopoly on transporting astronauts to the space station.
But Swope said he thinks Boeing would hesitate to sell the space business in the heat of the moment after a reputational blemish, despite the financial pressures.
“It’s hard to capture in your quarterly earnings, but the feelings of prestige and the heritage there might be on the minds of Boeing executives if they were contemplating separating that business unit,” he said.
Even if sentiment left them unswayed, the space business is a small part of Boeing’s overall finances. Fixing the commercial planes business will have a far greater impact on Boeing’s ability to generate free cash, Spingarn said, and thus will be the greater focus of Ortberg’s efforts.
“They’re all problems, but fixing commercial aeroplanes is job one,” he said. “Starliner is added to the list as another problem, but it’s well down the list.”
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