Aerospace company Boeing is selling its drone manufacturing subsidiary, Insitu Inc. Boeing may get up to USD500 million for the business, which builds drones for Ukraine’s military, among other things.
The divesture, not confirmed by Boeing but reported by Bloomberg, who cited people familiar with the talks, follows recent commentary from senior company executives about non-core businesses and their future role at Boeing.
Insitu’s (UAV) platforms include ScanEagle, Integrator, Integrator Extended Range (ER), ScanEagle 3, and RQ-21A Blackjack. Boeing acquired the company for USD400 million in 2008.
Insuti is a significant player in the drone market space, with a long history of working with the US and other militaries. In January this year, it was awarded a USD25.7 million contract from the US Navy to provide intelligence, surveillance, and reconnaissance support services to the US defense department.
Last month, Insitu won a USD102.3 million modification to an existing contract to procure twenty-one RQ-21A Blackjack and forty-seven ScanEagle air vehicles, plus associated equipment and services. However, Insuti has never become a significant revenue-generating machine for Boeing.
In 2021, it paid USD25 million to settle allegations it had overcharged the US military by using recycled parts. Late last decade, some other military contracts were axed following a spate of crashes. In 2024, the Chinese Government sanctioned the company. The touted USD500 million sale price is only USD100 more than Insitu’s acquisition price seventeen years ago.
Looking to sell non-core businesses
Boeing Chief Executive Officer Kelly Ortberg said during an earnings call in January that he wanted to dispose of non-core assets, particularly in the company’s space and defense programs.
Boeing posted an AUD19 billion loss for calendar 2024 and is sitting on debts of approximately AUD80.5 billion. Ortberg described the proposed sales as “pruning the tree.”
The drone market is forecast to hit USD55 billion by 2030, and Bloomberg reports the Insitu sale is garnering interest from private equity firms and corporate buyers. However, it also says the exit of a legacy manufacturer may accelerate innovation and benefit other players, particularly those who build smaller and cheaper UAVs.
Insitu’s drones can cost north of USD1 million each, which, while inexpensive compared to fighter jets, still represents a significant asset write-off when they crash or are otherwise destroyed.
No guarantee sale will proceed
While big-ticket Insitu UAVs such as the ScanEagle have played a significant role in Ukraine surveilling military Russian movements, the Ukraine military has also enjoyed considerable success with simple Kamikaze-style drones costing less than USD1,000. However, despite the cost, Insitu drones have built a reputation for reliability and toughness, which makes them attractive to certain buyers.
There is no guarantee Boeing will sell Insitu. While the cash would be handy, it is not a must-sell proposition. Last year, the company tested buyer interest in its Orca drone submarines. However, the sale did not proceed after buyer interest failed to match Boeing’s asking price.
Aside from Insitu, Boeing is believed to be actively exploring the sale of a navigation unit subsidiary called Jeppesen; two parts distribution businesses called KLX and Aviall, as well as Aurora Flight Sciences and Wisk Aero, two subsidiaries involved in the development of urban mobility aircraft.
