Boeing is halting operations at Boeing NeXt — its 2-year-old innovation unit focused on futuristic manned and unmanned air mobility — as it cuts spending on peripheral projects.
“Our goal is to move to a full pause as swiftly as possible,” Steve Nordlund, the head of St. Louis-based Boeing NeXt, wrote in an internal letter to his team Tuesday.
Boeing NeXt was launched at the Farnborough Air Show in 2018, toutedas a small, agile division that would focus on future forms of air transportation, including urban air taxis, last-mile delivery drones and supersonic aircraft.
It has been developing the broad urban air-mobility ecosystem, including the air traffic control technologies needed to manage a dense city airspace filled with autonomous drones and passenger air taxis.
The unit employs around 100 people inside Boeing, mostly in St. Louis and some in the Puget Sound area. It has joint ventures or investments with three external companies that are also now being assessed.
Nordlund’s letter indicated that the pandemic-driven cash crisis is squeezing Boeing’s revenue-generating core businesses too much to sustain the former level of investment in peripheral research.
“Organizations like these only have the privilege to exist when you have a healthy core business,” he told the NeXt team.
He noted that the unit had already “started to significantly cut back and limit our scope” as the 737 MAX crisis developed and hit Boeing’s revenue.
“As we now navigate through the impacts of COVID-19, it should come as no surprise that … I have recommended to [Boeing chief engineer] Greg Hyslop, and the entire Executive Council, that we fully pause the current Boeing NeXt mission … to adapt to our new market reality,” Nordlund wrote.
The letter states that Boeing will consider in the months ahead how to transfer NeXt’s assets to research and development units within the company’s main divisions and is “actively working to find meaningful roles elsewhere (within Boeing) for the team we have built.”
Boeing spokesperson Alison Sheridan said layoffs are not anticipated.
She added that although Boeing CEO Dave Calhoun has mandated a “focus on our core businesses,” the company’s investment in future air mobility “won’t stop altogether.” Some of it will continue at various units within Boeing, she said.
For example, Boeing NeXt worked with Boeing subsidiary Aurora Flight Sciences to design and develop an autonomous passenger air vehicle; the electric vertical takeoff and landing prototype had a test flight in January last year.
The CEO of Aurora reported to Nordlund at Boeing NeXt. Yet Sheridan said Aurora remains a separate subsidiary that will continue to work on its other unmanned and optionally manned air-vehicle projects and seek new contracts.
However, the move to pause Boeing NeXt puts in doubt the future of two joint ventures and an external investment.
In November 2018, Boeing NeXt launched SkyGrid, a joint venture with Austin, Texas-based SparkCognition to develop a software platform for managing and integrating air traffic involving autonomous cargo and passenger air vehicles.
Last year, it launched Wisk, a joint venture with Silicon Valley-based Kitty Hawk Corp. to develop a two-person air taxi.
Separately last year, Boeing NeXt made “a significant investment” in Reno, Nevada-based Aerion. It promised engineering, manufacturing and flight-test resources to bring Aerion’s AS2 supersonic business jet to market.
Sheridan said “we haven’t made decisions about our engagement with those three companies yet. That will be worked out between now through the end of the year.”
In his letter to employees, Nordlund presented the halt in operations as merely a “rest stop” until Boeing recovers from the current massive downturn in airline business.