Boeing Global Services (BGS) increased its share of business from commercial customers slightly in 2021, but the split between government and the civil aviation world remains notably shifted compared to before the downturn.
Boeing said 46% of BGS’s $16.3 billion in 2021 revenues came from the commercial market, up 1% year-over-year. In 2019, commercial sales grabbed 55% of an even larger pie of $18.5 billion in sales.
The change reflects the reality of the most drastic and prolonged downturn ever to hit commercial aviation. The reduction in airline activity explains why BGS’s total 2021 revenue was down 12% compared to 2019, even as sales from government contracts were up 5% over the same period.
More recent comps point to a steady commercial recovery. BGS’s $4.3 billion in fourth-quarter (Q4) sales were up 15% year-over-year and 2% compared to Q3.
"Global Services is recovering like all the service businesses that surround aviation,” President and CEO Dave Calhoun said on the company’s recent Q4 earnings call.
BGS’s Q4 growth was slowed by a $220 million write-down "driven by revised cost estimates on certain customer contracts,” the company said.
"We had a small write-off with respect to materials that ultimately would not be utilized in this recovery,” Calhoun explained on the call.
Boeing’s recovery timeline projections have not changed in recent months. The company still sees a three-phase recovery, led by domestic, then intra-regional, followed by long-haul, with overall traffic returning to 2019 levels in 2023-24.
"Long-term fundamentals that support demand for air traffic remain intact as we continue to project average traffic growth of mid-single digits over the long term,” CFO Brian West said.
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