Enterprise Risk Management at Boeing

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Case Details:

Case Code : ERMT-002
Case Length : 11 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : -
Industry : -
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Marketing Risks

The Commercial Airplanes Business was virtually a duopoly between Boeing and Airbus. It was once dominated by Boeing but was now split roughly 50/50 between the two players. The events of 9/11 combined with the economic slowdown had led to a sharp decline in demand for air travel and prompted US airlines in particular to cut capacity. Whilst demand for air travel had rebounded subsequently, it remained well below FY00 levels...

Political Risks

Any war or terrorist event would have a very negative impact on the airline industry. External business environment risks for Boeing included

  • Adverse governmental export and import policies,
  • Factors that resulted in significant and prolonged disruption to air travel worldwide...

Environmental Risks

Boeing's operations were subject to various federal and state environment laws. Areas of concern included discharge of hazardous materials and remediation of contaminated sites...

Legal Risks

On October 31,1997, a federal securities lawsuit was filed against Boeing in a US district court in Washington, Seattle. The lawsuit named as defendants the company and three of its then executive officers. Additional lawsuits of a similar nature were filed in the same court. These lawsuits were consolidated on February 24, 1998...

Financial Risks

Leverage & Liquidity

Boeing's consolidated net debt had increased over the past five years. In September 2002, net debt was $11.9 billion, compared to $1.7 billion in December 1997.

Despite strong growth in group EBITDA through to FY01, consolidated group leverage had continued to rise. The sharp decline in EBITDA at Boeing in FY02 as its commercial aircraft segment had suffered, coupled with additional funding needs at BCC had contributed to the increase in leverage...


Exhibit I: BoeingFinancial Highlights
Exhibit II: BoeingMilitary and Missile systems
Exhibit III: BoeingCommercial Airplanes
Exhibit IV: BoeingResearch and Development
Exhibit V: BoeingSales by Geography ($million)
Exhibit VI: BoeingConsolidated Financial Statement Extracts


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