Boeing repositioned defense before cuts, Albaugh says

Boeing Co., the second-largest U.S. defense contractor, "repositioned" itself to compete for government work in anticipation that some programs would be reduced or eliminated.

The Chicago-based company plans to pursue opportunities in areas including cyber-defense and intelligence, Jim Albaugh, the president of Boeing's defense unit, said in an interview today on Bloomberg Television in New York.

Boeing's defense operations represent more than half of its revenue and the planemaker stands to lose the most under the Pentagon's 2010 budget. U.S. Defense Secretary Robert Gates said April 6 the Obama administration wants to curb some Boeing-related programs including the company's anti-missile Airborne Laser to steer funding toward immediate battlefield needs and threats.

"For the last several years we've been predicting that the defense budget will flatten, and indeed it is," Albaugh said today. "We, like many of the other defense contractors, are impacted.

"At the same time there were opportunities that were brought up by Secretary Gates," Albaugh said. "We tried to reposition ourselves over the last several years into those areas of the market that we think will grow."

Albaugh sees opportunities for defense-related sales of helicopters, systems for cyber defense, communications, intelligence, and surveillance and reconnaissance.

Boeing had $32 billion in defense sales last year, or 52 percent of its $60.9 billion total. Boeing rose $1.17, or 2.7 percent, to $44.17 at 3:19 p.m. in New York Stock Exchange composite trading.