Boeing (BA) could be shooting past the moon and on to Mars in the long term.
Shares of the Chicago-based manufacturer are soaring into the stratosphere on Wednesday morning after a record earnings beat in pre-market hours. Yet the morning surge could belie the company's vision that is truly out of this world.
Shares were up nearly 7% to $389.90 as of 12:50 p.m. ET.
"At Defense Space & Security we continued to see solid demand for our major platforms, the BGS portfolio is well positioned with a mature world class set of platforms to address current needs and innovative capable and affordable new franchise programs to build the future," CEO Dennis Muilenberg told analysts on Wednesday morning. "We expect to continue to see broad support for our products from the Pentagon and Congress."
NASA, which is making a BIG comeback under the Trump Administration, has just named 9 astronauts for Boeing and Spacex space flights. We have the greatest facilities in the world and we are now letting the private sector pay to use them. Exciting things happening. Space Force!— Donald J. Trump (@realDonaldTrump) August 3, 2018
The support from Congress has already picked up this week, with acting Secretary of Defense, and former Boeing executive, Patrick Shanahan pushed the issue to the forefront on Tuesday.
I am pleased to announce that our very talented Deputy Secretary of Defense, Patrick Shanahan, will assume the title of Acting Secretary of Defense starting January 1, 2019. Patrick has a long list of accomplishments while serving as Deputy, & previously Boeing. He will be great!— Donald J. Trump (@realDonaldTrump) December 23, 2018
According to Politico, the national defense czar is putting the finishing touches on the Pentagon's proposal to establish a Space Force, something that Boeing could certainly seize on after reporting strong results in its space and satellite driven efforts.
President Trump: "My upcoming budget will invest in a space-based missile defense layer technology ... We will ensure that enemy missiles find no sanctuary on Earth or in the skies above." pic.twitter.com/7Z40SwpT3w— MSNBC (@MSNBC) January 17, 2019
The Space Governance Committee, which will oversee the effort on behalf of the U.S. government, will consist of about a dozen key personnel drawn from the department's policy, legislative affairs and public affairs shops, according to a Department of Defense spokesman.
The tangible committee adds to ambitious statements from Vice President Mike Pence late last year.
"The time has come to establish the United States Space Force," Pence said in August, shortly after the disclosure of a management structure report for the proposed program that touts its launch for 2020.
Now that the government shutdown has concluded, it is possible that this effort could gain some steam and provide some rocket fuel to Muilenberg's bullishness on space. The question that remains is over how watered down the eventual effort may be once the cutting edge military branch comes into being.
"Congress has demonstrated robust support for our key Space exploration programs," Muilenberg commented, noting persistent optimism.
That not only applies to defensive capabilities, but also the exploration that Muilenberg touched on.
The company is currently helping develop NASA's Space Launch System to help develop a habitat to cislunar space near the Moon.
Known as the Deep Space Gateway, the proposed habitat would be used for research of the moon and the nearby solar system.
"The ability to simultaneously launch humans and cargo on Space Launch System would allow us to assemble the gateway in four launches in the early 2020s," said Pete McGrath, director of global sales and marketing for Boeing's space exploration division in mid-2017.
The exploration would not stop at the moon either, but instead would extend to the red planet.
"The Deep Space Gateway could be the waypoint for Mars missions," a statement from Boeing reveals. "Utilizing a docking system akin to what the International Space Station uses for commercial operations, it could host the Deep Space Transport vehicle, which would take humans to Mars. Once near Mars, crews could deploy a lander for surface missions or conduct other scientific and robotic missions in orbit."
The lofty goals echo those of Tesla (TSLA) CEO Elon Musk and his SpaceX effort.
However, Musk's dream appears to be hitting a wall as of late, with the announcement that the program would cut 10% of its staff earlier this month.
"To continue delivering for our customers and to succeed in developing interplanetary spacecraft and a global space-based Internet, SpaceX must become a leaner company," SpaceX president Gwynne Shotwell wrote in an email to employees. "Either of these developments, even when attempted separately, have bankrupted other organizations. This means we must part ways with some talented and hardworking members of our team."
The cash rich state of Boeing should help ward off the impact of capital requirements that Musk's Mars missions appear to be encountering.
Muilenberg added that demand for the extra-terrestrial effort remains strong even outside of the U.S. and NASA as more countries set their sights on the solar system.
"Demand from outside of the U.S. for our Defense Space offerings also remains high in particular for rotor craft, commercial derivative fighters, and satellites," he said.
The demand from outside the United States for the high cost products are particularly beneficial for Boeing as well, as the company does not accept foreign currencies for its orders. Along with Cisco (CSCO) , it is one of the only companies where U.S. cash is always king.
The standard payment method insulates the company from one of the key macro risks affecting other companies, such as were on display with the Lira crisis that threatened certain sectors and also Boeing competitors.
"The industry is almost a duopoly where prices are mostly set in dollars but one competitor, namely Airbus, has costs that are largely denominated in euros. Airbus (EADSY) thus bears the full brunt of euro/dollar fluctuations," a report fromThe Centre d'Études Prospectives et d'Informations Internationales explains, positioning the company;s practices in terms of commercial sales. "In contrast, the other firm, Boeing, is almost completely protected from exchange-rate movements because its costs are mostly in dollars."
In short, the company's cash position and cash-demanding business practices defend it from macro risks as it explores super-macro solutions.
As the company continues to leverage its leadership in aerospace, it could be one of the first companies to dominate not only on the domestic and international stages, but on the interstellar stage.