Boeing to Reorganize Its Financial Services

Boeing Co. on Monday said it will integrate its financial service operations in a move to boost competitiveness by offering full-service financing.

As part of the effort, the company will reorganize Boeing Capital Corp., the Long Beach-based financing unit it acquired with the purchase of McDonnell Douglas Corp. in 1997.

The headquarters of Boeing Capital will move from Long Beach to Seattle, where it will handle financing for Boeing’s commercial aircraft, military aircraft and missiles, and space and communications markets. The company should decide by the end of the year whether to keep an office in Southern California, Boeing spokesman Larry McCracken said. The reorganization involves 100 employees. It wasn’t immediately clear if the workers would be transferred.

Product financing has become an increasingly important strategy in winning customers in the aerospace business. Airbus Industrie, Boeing’s only competitor in the market for commercial aircraft seating more than 100, has won praise in recent years from customers for introducing innovative finance packages.

“Boeing in the past kept saying, ‘We make airplanes. We’re not a bank,’ ” said JSA Research analyst Paul Nisbet, who rates Boeing a “hold.” “But I think they have to be.”

Shares of Boeing rose 81 cents to close at $43.69 on the New York Stock Exchange.

Boeing employs about 210,000 people worldwide and is the biggest private employer in Southern California.

Boeing spokesman Larry McCracken said, “This is really a consolidation of people [who] have been doing financing in different business units.”

Seattle-based Boeing didn’t have a separate finance subsidiary until it inherited the McDonnell Douglas finance unit, which it renamed Boeing Capital Corp.

The unit has remained focused on financing Douglas aircraft and capital goods. Boeing carried out financing for its planes under a separate organization.

Building up its customer-finance activities will enable some of the financially weaker airlines to buy Boeing aircraft, Nisbet said. That doesn’t mean Boeing plans to encroach on the business of its large leasing customers, who buy planes from Boeing and Airbus for lease to others, he said.

“I don’t think they’ll get into big leasing deals, because that would compete directly with the leasing companies, and I don’t think they want to do that,” Nisbet said.

The bulk of Boeing’s financing business will remain focused on passenger aircraft, Nisbet said. Financing for military purchases tend to be handled by governments.