Boeing Teams Up With Fujitsu - Analyst Blog

The Boeing Company(BA) has teamed up with Fujitsu Ltd (FJTSY) to develop a service to bring in more efficiency in aircraft maintenance operations. The duo will employ unique tools such as Radio Frequency Identification Devices (RFID) and Contact Memory Buttons (CMB) to allow its airline customers to use these technologies without needing to retrofit their own fleets. Airlines by using the services will be able to improve their cost structure by reducing inventory and manual data entry errors.

Per the agreement, Fujitsu will provide Boeing with a globally-shared platform that includes automated identification technology devices, device readers, software applications and a system integration and deployment service. Boeing will improvise solutions based on individual needs for its customers. Boeing plans to launch this service for its airline customers in the first quarter of 2012.

Boeing expects the new service to help its customers in better managing aircraft components, equipment and materials by retrofitting them with automated identification technology devices, allowing automated data management and highly visible supply chain related maintenance processes.

Fujitsu is a leading provider of Information Communications Technology-based business solutions for the global marketplace. With approximately 170,000 employees spread over 70 countries, Fujitsu combines a worldwide chain of systems and services experts with highly reliable computing and communications products and advanced microelectronics that deliver added value to customers. Headquartered in Tokyo, Fujitsu reported consolidated revenues of $50 billion for the fiscal year ending March 31, 2010.

Headquartered in Chicago, Boeing is a premier jet aircraft manufacturer and one of the largest defense contractors in the U.S. The company's customers include domestic and foreign airlines, the U.S. Department of Defense, the Department of Homeland Security, the National Aeronautics and Space Administration, other aerospace prime contractors and certain U.S. government and commercial communications customers.

Boeing is the largest aircraft manufacturer in the world in terms of revenue, orders and deliveries, and the second largest aerospace and defense contractor. Also its revenue exposure is spread across more than 90 countries around the globe. Demand for Boeing's Commercial Airplanes, due to the continuing recovery of the global economy, is emanating from a steady improvement in passenger and freight traffic.

To catch up with the expected rise in air traffic and to check fuel bills, airliners will need to replace older airplanes with new ones. The company expects U.S. and Canadian airliners alone to invest about $700 billion for fleet extension over the next 20 years.

Going forward, situations appear more promising for Boeing with bullish prospects expected worldwide. The International Air Transport Association (IATA) forecasts 2010 global passenger traffic to grow by 8% year-over-year. Also, air cargo traffic is rebounding, growing 24% in the first half of 2010 driven by Asian exports.

IATA anticipates a 20% cargo traffic growth in 2010. Going by recent trends, the prospect for the Commercial Airplanes segment of Boeing is looking brighter, as the company ended the third quarter of 2010 with 3401 airplanes at an estimated value of $255 billion. However, the constant delay in first delivery of 787 airplanes remains a cause of concern.

The Boeing Company currently retains a Zacks #3 Rank (short-term Hold rating).