Boeing CEO sees US defense budget remaining strong
Boeing CEO Dennis Muilenburg on the company's supply challenges keeping up with growth, the company's sales in China, the sector's growth potential and the government's defense spending.
Despite concerns over a rising U.S. federal deficit and calls from some Democrats to reduce the defense budget, aerospace and defense giant Boeing expects U.S. defense spending to remain strong.
CEO Dennis Muilenburg told FOX Business’ Maria Bartiromo during an interview on “Mornings with Maria” Tuesday that the U.S. budget outlook now is better when compared with a couple years ago.
“We see the defense budget here in the U.S. being sustained,” he said. “If you look back a couple of years when we were in the middle of sequestration, we feel like we’re in a stronger budget position now on both sides of the aisle.”
President Trump has placed an outsized emphasis on increasing U.S. military spending in an effort to rebuild the armed forces. The 2018 budget allocated nearly $700 billion for defense and a $716 billion defense authorization budget has been approved for fiscal 2019.
“I think we’ll find that the money Congress and the president have given the military in the past two years has been desperately needed – and that level of funding has got to continue if the country wants to rebuild the military,” retired Lt. Gen. Thomas Spoehr, director of the Heritage Foundation's Center for National Defense, told FOX Business last month.
Since Democrats won control of the U.S. House of Representatives in midterm elections, there are concerns lawmakers of the party will push for a reduction in military-related spending – a policy that quite a few members have already called for. Political gridlock could also result in the passage of continuing resolutions, which keep funding levels steady and can prevent the military from cementing contracts or starting new programs and training plans.
Boeing’s defense business boosted earnings during its most recent fiscal quarter, thanks in part to a slew of new government contracts from the military -- including a $9.2 billion deal with the Air Force to build training jets.
But the company isn’t completely reliant on business from the U.S.: Muilenburg told FOX Business that one-third of Boeing’s defense backlog is comprised of orders from other countries.
Muilenburg also said Boeing’s 737 Max jet is safe, despite a report on Tuesday that the company withheld information about dangers associated with a new feature that was believed to play a role in the deadly Lion Air crash last month.