Boeing needs money: Digital Aviation Solutions sold

The aircraft manufacturer Boeing is selling a large part of its Digital Aviation Solutions division. The buyer, the US investment company Thoma Bravo, is paying 10.55 billion US dollars (currently 9.16 billion euros). This reduces Boeing's debt mountain, which was around 53 billion US dollars at the end of the year.

“This transaction is an important part of our strategy to focus on our core business, improve our balance sheet and prioritize our credit rating,” said Boeing CEO Kelly Ortberg on Tuesday. After all, high debt means a poorer credit rating means higher interest rates. The subsidiaries and brands sold include Jeppesen, Foreflight, Aerdata and Ozrunways. However, Boeing will retain certain solutions for core tasks such as fleet management, diagnostics, and repair. In addition, Boeing software will continue to help customers with preventive maintenance.

It is not clear from Boeing's announcement how many of the 3,900 employees at Boeing's Digital Aviation Solutions will have to change employers. It is likely to be the majority. The two companies are also not saying anything about any redundancies. The contract is binding and the closing is planned for the end of the year, provided that the necessary competition law approvals are granted.

Thoma Bravo was founded in 2008 and primarily invests in tech companies that are often sold again after a few years. Well-known names in the extensive portfolio are Sophos and Solarwinds. Of course, not all investments are profitable, for example an investment of 130 million US dollars in the cryptocurrency exchange FTX.

Boeing needs money

Safety issues have impacted Boeing's business performance since the crash of two 737 Max 8 aircraft in October 2018 and March 2019; it was only five years after the (arguably avoidable) accidents that Boeing pleaded guilty to the crime of conspiracy to commit criminal fraud. This move was unavoidable after a virtually new Boeing 737 Max 9 lost a door hole cover in flight earlier this year. Recently, Boeing apparently wants to withdraw its confession to obtain a more lenient sentence from the US Department of Justice under Donald Trump.

In addition, there are considerable losses with space and military contracts. The company concluded fixed-price contracts and made huge miscalculations in the process. There are now even rumors of a sale of the space division to Blue Origin. A strike in the fall worsened the financial situation and slowed down the production of military projects derived from civilian products in particular. Turnover in the fourth quarter of 2024 fell by 31% year-on-year to USD 15.2 billion. The operating profit of 283 million dollars turned into a loss of 3.8 billion dollars. Boeing's business figures for the full year 2024 are little better.

The problems did not arise suddenly, but have accumulated over decades. In particular, the outsourcing strategy pursued by former CEO Harry Stonecipher has had a lasting impact. It was important to him that Boeing “ran like a business instead of a great engineering company.” Since he took office as Boeing President in 1997, the company has spent well over 60 billion US dollars on the purchase of its shares. This supports the share price, which certainly doesn't hurt the management, but the money is then lacking elsewhere, for example in quality assurance, the development of a new generation of aircraft and the remuneration of employees. Robert “Kelly” Ortberg has been the new Boeing CEO since August.

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