Jepp

[Brandt]

Boeing Is Said to Weigh $6 Billion Sale of Jeppesen Unit (1)

By David Carnevali and Julie Johnsson | November 8, 2024 12:20PM ET

• Planemaker working with adviser on potential sale to trim debt
• Provider of interactive flight plans attracting buyer interest

Updates with shares in the fourth paragraph.

Boeing Co. is exploring a sale of its Jeppesen navigation unit as the planemaker draws up a list of assets it could shed to help lighten its $58 billion debt load, according to people familiar with the matter.

The company is working with an adviser on the potential sale of the provider of interactive flight plans, said the people, who asked not to be identified discussing confidential matters.

Suitors are already circling Jeppesen, which could attract sizable interest from private equity firms as well as other companies, said the people. The unit could fetch more than $6 billion, depending on the buyer appetite and peer group of comparable assets, some of the people said.

Boeing’s shares reversed earlier losses to trade up less than 1% as of 12:19 p.m. in New York.

A sale process for the asset, which is profitable and commands a broad customer base from airlines to amateur pilots, could happen as soon as the first half of 2025, the people said. Boeing said last month that it will continue to use rather than generate cash in that period as recovers from a 53-day strike that shut down its factories along the West Coast.

The portfolio review is ongoing and Boeing could still decide to hold onto the business, the people cautioned. A spokesman for the company declined to comment.

Read More: Boeing Explores Disposal of Some Defense Assets Amid Crisis

Selling Jeppesen, which Boeing acquired in 2000 for $1.5 billion in cash, would help whittle down its towering debt. Those in favor of a divestment argue that it would generate significant proceeds and be easier to carve out than other assets.

At the same time, parting with the aviation navigation pioneer dating back to the 1930s would deprive Boeing of an asset with a reliably strong financial performance and cash flow, the people said

Asked last month about the possibility of a Jeppesen sale, Boeing Chief Executive Officer Kelly Ortberg said he’s reviewing the company portfolio to study whether a business or product fits with the long-term strategy or whether it would be better off someplace else. He declined to comment on the plans for Jeppesen.

“I just don’t have that list to tell you right now what am I going to do,” Ortberg told analysts on an earnings call. 

Ortberg has made clear that he’s seeking to divest non-core assets as part of a broader push to shore up the balance sheet and focus resources on the core commercial jet and defense manufacturing. As part of the initiative, which Ortberg aims to complete by year-end, Boeing is also exploring whether to continue its troubled Starliner program for NASA amid mounting losses, Bloomberg has reported. 

Many of the companies that Boeing has bought over the previous two decades could again be readied for disposal, according to Cai von Rumohr, an analyst with TD Cowen. Along with Jeppesen, the former KLX and Aviall parts distribution businesses could be sold, he said in an Oct. 1 report. Aurora Flight Sciences and Wisk Aero, which are developing experimental and urban mobility aircraft, are also among the possible divestiture candidates, he said.

Boeing doesn’t need to move urgently on asset sales now that it has resolved two of its most pressing crises. The company just ended a seven-week strike with its largest union, and it raised as much as $24 billion to shore up its investment-grade credit rating. That measure should give Boeing the resources to navigate through any operational issues in the near- to medium term and cover the $12 billion in debt that’s maturing over the next two years.

Ortberg joined the company in August. An engineer by training, he previously ran Rockwell Collins, an electronics manufacturer that’s now part of RTX Corp. Among Rockwell Collins’ products are cockpit communications and computing products that overlap with Jeppesen’s offerings.

[N201MKTurbo]

There goes the price of our databases....

Not that they are cheap now.

[N201MKTurbo]

How does Jepp still exist it is a monopoly. It should be broken up.

[toto]

6 hours ago, N201MKTurbo said:

There goes the price of our databases....

Not that they are cheap now.

I switched to Garmin navdata years ago, and haven’t looked back. It’s quite a bit cheaper than Jepp, and while I do prefer the Jepp chart format, I don’t prefer it enough to justify the additional cost. 

[KSMooniac]

Garmin is not always cheaper... Depends what you have/need, and when you buy a subscription. I had hoped Garmin entering the nav data market would've helped, but they just made it more complicated with their bundles and lack of transparency.

Sent from my motorola edge plus 2023 using Tapatalk

[1980Mooney]

1 hour ago, toto said:

I switched to Garmin navdata years ago, and haven’t looked back. It’s quite a bit cheaper than Jepp, and while I do prefer the Jepp chart format, I don’t prefer it enough to justify the additional cost. 

 

7 minutes ago, KSMooniac said:

Garmin is not always cheaper... Depends what you have/need, and when you buy a subscription. I had hoped Garmin entering the nav data market would've helped, but they just made it more complicated with their bundles and lack of transparency.
 

If a new buyer of Jepp raises prices significantly in order to earn a return on an inflated price that they pay Boeing, I hope you don’t seriously believe that Garmin will just sit on their hands and hold prices steady. Monopoly or duopoly -there is no competition. I would expect Garmin to do the same thing.

If you look at McCullough propeller prices you will find that they have increased just as much as Hartzell. When Arcline//Hartzell jammed through big price increases, they “raised the umbrella” for everyone else to raise prices. 

[McMooney]

wow this is gonna suck, garmin or private equity, i'd expect db prices to double 

[toto]

6 hours ago, 1980Mooney said:

I hope you don’t seriously believe that Garmin will just sit on their hands and hold prices steady.

Database prices right now are absurdly expensive, and that’s with Garmin at a much lower price point than Jeppesen for my subscription. The bundles are ludicrous, packaging stuff that I don’t particularly need (terrain and obstacles can be updated once per year with no real impact on my flying) with stuff that I do need (navdata). And both Jepp and Garmin are selling me data that I already paid for once as a taxpayer.

The convenience of navdata on a chip is certainly worth something to me over the pain of paper charts, but if navdata becomes significantly more expensive, it will influence my hardware buying decisions. This is not a limitless well that private equity leeches can drain forever. Garmin makes fantastic hardware, and I’m happy that they are providing a competitor to Jeppesen on the navdata side. But they know well that their hardware sales can’t survive a massive increase in database pricing - Avidyne and others will be happy to repackage government data and capture a bigger slice of the hardware market as a result.

I suspect that Garmin got into the navdata business for exactly this reason - Jepp was previously the sole provider of navdata for Garmin hardware, and Jepp pricing decisions had influence over Garmin hardware sales. Being in the navdata business gives Garmin some navdata independence, and doesn’t put them at the mercy of Boeing or whatever private equity firm comes along to try to milk the data subscriptions. I doubt seriously that Garmin views navdata as a key profit driver - it’s a moat to protect their hardware business. 

[KSMooniac]

I agree completely that the situation sucks badly, and will likely get much worse with a PE takeover or Garmin monopoly. Last time I shopped for my needs, Jepp was significantly cheaper than Garmin AND they gave me 2 new data cards for free because they were old and dropped out of their inventory system! Garmin sold me a bundle the year before to include a portable update, but when I went to do that, they said my 496 was NOT eligible because it was too old. Then they offered to sell me that update separately for another $100 or $150. That is really awful behavior/customer service... And that was to my face at their Osh tent.

At this point we should be able to download nav data directly from an FAA server for free or very low cost. Pipe dream, I know, because they would probably get the same flunkies that made the Obamacare website to make it, and it would cost billions.

Sent from my motorola edge plus 2023 using Tapatalk

[1980Mooney]

1 hour ago, KSMooniac said:

At this point we should be able to download nav data directly from an FAA server for free or very low cost. Pipe dream, I know, 

 

It’s a pipe dream for a different reason. I suspect going forward there is going to be a major effort to NOT provide anything for “free”. I wouldn’t be surprised to hear a proposal for ATC User Fees (again). 

[hais]

It sure must cost a pretty penny to operate Jepp. Why would Boeing otherwise sell a unit that has high margins? 

I'm not defending the prices...just wondering whether it's truly expensive to maintain the data. 

[bigmo]

A buyer looking to expand interest in the US market (like Navblue) would be great. A bunch of private equity vultures looking to maximize and extort profit for many of us locked into Jepp would suck royally. I have a box in my F that can only use Jepp - so I'd have to buck up or simply not use that functionality (which I use heavily).

Private equity firms snatching up GA critical resources is going to be the nail in the GA coffin.

[Pinecone]

On 11/8/2024 at 5:27 PM, N201MKTurbo said:

How does Jepp still exist it is a monopoly. It should be broken up.

How is it a monopoly?  There are other sources for charts, such as the US Government.

[KSMooniac]

I think most would say that we need a US Gov't/NACO distribution for the electronic nav data.  I don't care what Jepp or Garmin charges for their own unique/premium products that I don't use, but we don't really have a choice in the modern era to skip the nav data for IFR navigators.

[N201MKTurbo]

22 minutes ago, Pinecone said:

How is it a monopoly?  There are other sources for charts, such as the US Government.

For my Avidyne, they are the only place I can get databases.

[KSMooniac]

Rich, what do they charge for a year of nav data only?  I'm still waffling on panel/autopilot upgrade path and ongoing subscription costs are going to factor heavily in the Garmin vs. Dynon vs. Aspen debate.  I have dual GNS WAAS currently, so an IFD swap is enticing.

[EricJ]

1 hour ago, KSMooniac said:

I think most would say that we need a US Gov't/NACO distribution for the electronic nav data.  I don't care what Jepp or Garmin charges for their own unique/premium products that I don't use, but we don't really have a choice in the modern era to skip the nav data for IFR navigators.

That already exists.   The free EFBs, like Avare, FltPln Go, etc., and even some of the subscription EFBs like iFly, just use the government data.   In other words, if you use Avare or FltPln Go, you have a free EFB and you have free charts and plates and nav data, downloadable every 28 days.

The value added by Jepp or Garmin is minimal over the free government downloads, but neither Garmin or Avidyne allow use of the non-subscription files.   I don't know why.

 

[EricJ]

1 hour ago, KSMooniac said:

Rich, what do they charge for a year of nav data only?  I'm still waffling on panel/autopilot upgrade path and ongoing subscription costs are going to factor heavily in the Garmin vs. Dynon vs. Aspen debate.  I have dual GNS WAAS currently, so an IFD swap is enticing.

I renewed in Jun, and nav data was $426 and obstacles was $162.  That was for West/Central USA.    I think maybe now it's less for more coverage now as there was a price reduction that happened, iirc.

[KSMooniac]

5 minutes ago, EricJ said:

That already exists.   The free EFBs, like Avare, FltPln Go, etc., and even some of the subscription EFBs like iFly, just use the government data.   In other words, if you use Avare or FltPln Go, you have a free EFB and you have free charts and plates and nav data, downloadable every 28 days.

The value added by Jepp or Garmin is minimal over the free government downloads, but neither Garmin or Avidyne allow use of the non-subscription files.   I don't know why.

 

That's not what I meant... you cannot use any of the free EFB products to get the data into your IFR navigators that the plane actually uses.  Charts and plates that you use, absolutely, but you still need to pay $300/yr or more to somebody to feed a GNS, GTN, IFD, etc.  (I use FltPlan Go for a backup EFB myself, and their web planner is fantastic)

[EricJ]

4 minutes ago, KSMooniac said:

That's not what I meant... you cannot use any of the free EFB products to get the data into your IFR navigators that the plane actually uses.  Charts and plates that you use, absolutely, but you still need to pay $300/yr or more to somebody to feed a GNS, GTN, IFD, etc.  (I use FltPlan Go for a backup EFB myself, and their web planner is fantastic)

Yes, I said as much, and was just pointing out that that data exists already, in forms that are legally usable for navigation, we just can't use them in the in-panel boxes for some unknown reason.   The differences between the databases can't be big, so the value-add by Garmin or Jeppesen is not very much.

[1980Mooney]

On 11/9/2024 at 1:54 PM, bigmo said:

A buyer looking to expand interest in the US market (like Navblue) would be great. A bunch of private equity vultures looking to maximize and extort profit for many of us locked into Jepp would suck royally. I have a box in my F that can only use Jepp - so I'd have to buck up or simply not use that functionality (which I use heavily).

Private equity firms snatching up GA critical resources is going to be the nail in the GA coffin.

Interesting thought but NAVBLUE is Airbus’ flight operations software subsidiary.  I doubt that Airbus would want to pay Boeing a premium price of $6 billion in precious cash that they need themselves - especially for something that is not core to manufacturing and selling aircraft.