Boeing Bets on the Future of Air Taxis and “Robo-planes”

Boeing Co. is buying drone pioneer Aurora Flight Sciences Corp., gaining a portfolio of futuristic technology such as unmanned air taxis that may someday navigate city skies for Uber Technologies Inc. With the acquisition, Boeing is betting that smarter airplanes will dominate flying, with computer algorithms and artificial intelligence playing an increasingly important role in the cockpit. Aurora is an early leader in autonomous flying, with products like a robotic co-pilot and software that can sense landing strips. “We can’t predict what that future looks like. But whatever form that air travel takes, we want to be a leader,” Greg Hyslop, Boeing’s chief technology officer, said on a webcast after the acquisition was announced.

The deal underscores Boeing’s focus on smaller, targeted transactions while competitors such as Northrop Grumman Corp. and suppliers like United Technologies Corp. pursue large-scale mergers. Boeing said the purchase of Manassas, Virginia-based Aurora, which has 550 employees, would not affect its financial guidance. Terms were not disclosed in a statement by the companies. Hyslop did not say if he expects the takeover to close this year, noting that the purchase is subject to U.S. Defense Department approval over the transfer of some of Aurora’s leading-edge technologies.

Aurora has designed, produced and flown more than 30 unmanned air vehicles since the company was founded in 1989. Its aircraft use autonomous technology including perception, machine learning and advanced flight-control systems. There is the Centaur, an “optionally piloted aircraft,” and a robotic co-pilot that has flown a Boeing 737 flight simulator.

In April, the company successfully flew an air-taxi prototype that takes off and lands vertically, handy for rooftop arrivals and departures. Aurora aims to deliver 50 of the aircraft by 2020 for testing by Uber Elevate, the ride-sharing company’s initiative for flying cars. Uber, which also counts Textron Inc. and Embraer SA as partners, envisions urban customers zipping over traffic snarls with aircraft summoned by computer or mobile phone. Autonomy will have to play a crucial role if the technology is to be successful, said John Langford, Aurora’s chief executive officer. For the economics to work, fleets of air taxis and drones will need to involve networks of vehicles with a single controller operating “dozens” of airplanes, he said.

The company had not considered selling itself until Boeing approached it several months ago, Langford told reporters during a conference call. “We decided it could really be a powerhouse combination,” he said, “in terms of getting our innovations out to a world market.” The two companies already work closely together on a range of defense and commercial products, Langford said. Aurora, Boeing and aerospace robotics manufacturer Electroimpact Inc. teamed up to create developmental test components of the all-composite wing for the 777X, the new jetliner that the Chicago-based plane maker is developing.

Aurora’s expertise in self-flying aircraft will also benefit Boeing, which has stepped up its research in that area as a pilot shortage threatens to crimp airline growth. The plane maker is studying artificial intelligence that would allow a single pilot to be at the controls during long flights, a potential step toward fully autonomous flights. “We’re looking at the advances in sensing technology, artificial intelligence and other aspects around autonomous flight — what that can do to make a safe airplane even safer,” Hyslop said. “There’s clearly areas on our commercial aircraft that Aurora can play a role in.”

Aurora is a leader in electric propulsion for aircraft, another area of interest for Boeing as automakers spur rapid advancements in battery technology. Boeing’s venture capital arm has also invested in Zunum Aero, a Kirkland, Washington-based company developing hybrid-electric aircraft. Aurora, with Honeywell International Inc. and Rolls-Royce Holdings Plc, is developing a hybrid-electric plane for the U.S. Defense Department. The aircraft is powered by 24 ducted fans that tilt, enabling it to take-off vertically like a helicopter, or to hover or cruise. Once the acquisition closes, Aurora will become a subsidiary under Hyslop’s Boeing Engineering, Test & Technology division. It will keep an “independent operating model,” Boeing said.


  1. Bloomberg
  2. – TechCrunch

Ford’s New CEO Lays Out an Ambitious Turnaround Plan

Ford’s new CEO Jim Hackett wants the automaker to be “fitter.” To Hackett, and the rest of the Ford’s senior leadership, that means slashing costs by $14 billion by investing less in manufacturing cars and putting more money into electric vehicles, trucks, and SUVs. Hackett, along with several senior executives, outlined a new strategy for Ford recently that is aimed at making the automaker more competitive and profitable. Hackett, who took over as CEO in May, shared several priorities to reshape the company. Though Hackett has discussed some of these before, he and other executives have now put numbers behind their once nebulous vision for the future.

Cut Costs – Ford will slash costs by $14 billion in five years. The company will target $4 billion in product engineering and $10 billion in material costs. Ford says it can reduce engineering costs from planned levels by increasing use of common parts across its full line of vehicles, reducing the number of possible option combinations customers can order, and building fewer prototypes.

Shifting Money to The Money Makers – The Ford F-Series has been a dependable profit maker for Ford, particularly in the U.S. where it has been the best-selling vehicle for more than three decades. Meanwhile, the appetite for crossover SUVs is strong. So, Ford is taking $7 billion away from cars and putting it to work in areas that will deliver more profits: trucks and SUVs, including the Ranger and EcoSport in North America and the all-new Bronco. And the company’s efforts will not be U.S.-centric. They are taking this trucks-SUVs vision globally.

China – Ford is not ditching cars altogether. But it is moving some manufacturing to China. The company says it plans to build the next-generation Ford Focus for North America in China to save money.

Pivot From Gas to Electric – Ford is reducing the money it spends on internal combustion engines by one-third and then putting those funds towards electrification. That is on top of Ford’s previously announced plans to invest $4.5 billion and add 13 new electric cars to its lineup by 2020, including an F-150 hybrid, Mustang hybrid, and all-electric small SUV. Despite these shifts, however, Ford has made it clear that it is not moving completely away from gas-combustion engines.

Simplify and Modernize – There are 35,000 different configurations of the current generation Ford Fusion. The automaker plans to reduce that to 96 in the next generation. Ford has already made a tenfold reduction to the number of orderable combinations in the next-generation Escape from 2,302 to 228. Fewer combinations and new tools will help Ford reduce new vehicle development by 20%, the company said. Ford also pledged to redesign its factories and add 3D printing, robotics, and virtual reality tools to speed up the design, development, and production of its cars, trucks, and SUVs.

Make Internet Connectivity a Priority – Hackett is pushing Internet connectivity, promising that 100% of its new U.S. vehicles will be built with the capability. This connected car vision extends in foreign markets as well with plans for 90% of new global vehicle to feature connectivity by 2020. In-vehicle Wi-Fi is not ubiquitous quite yet. Yet it is still a selling point. And it is considered critical for all the services and features that technology can support including, advanced driver assistance systems and autonomous vehicles.


  1. – Fortune
  2. – Chicago Tribune

The Good News Is . . .

Good News

  • Construction spending was up 0.5% in August. Spending on residential construction rose 0.4% and multi-family spending rose 0.9%. Single-family home construction spending and home improvement spending have shown solid gains in the last 2 months. Nonresidential construction spending rose 0.5% in August. The transportation-related construction segment was up 4.4% and spending on educational buildings rose 3.5%.
  • Pepsico Inc., a leading global food and beverage company, reported earnings of $1.49 per share, an increase of 8.8% over year-earlier earnings of $1.37 per share. The firm’s earnings topped the consensus estimate of analysts by $0.04. The company reported revenues of $16.24 billion, an increase of 1.3%. Management attributed the results to strength in foreign sales and an improved gross margin.
  • Ikea, the Swedish home goods retailer, announced that it had agreed to acquire TaskRabbit, a company known for, among other things, sending tool-wielding workers to rescue customers befuddled by build-it-yourself furniture kits. Ikea said that it had signed an agreement to acquire the privately held TaskRabbit but declined to say how much it was paying. TaskRabbit will continue to operate independently once the deal closes. TaskRabbit uses its online marketplace to connect 60,000 freelance workers, or “taskers,” with people looking to hire someone to do chores like furniture assembly, moving and handyman fixes. In their listings, workers specify their hourly rates. Ikea runs 357 stores in 29 countries, 44 of which are in the United States. The company said in a statement that TaskRabbit services could eventually be extended globally.


  1. – Bloomberg
  2. – CNBC
  3. – Pepsico Inc.
  4. – New York Times Dealbook

Planning Tips

Guide to Housing Market Indicators

Housing market activity (residential investment) contributes about 5% to the U.S. gross domestic product, taking into account investment in the construction of single and multi-family housing, together with the remodeling costs, and other associated fees like broker fees. There is a variety of useful indicators for investors who are looking to get an idea about the state of the US housing sector. Used together, these indicators could help paint a picture of the health of the housing market. Thus, whether you are an investor looking to follow the broader economy or you are just looking for indications about the state of the housing market, you should consider the following housing market indicators. Be sure to consult with your financial advisor if you are considering an investment in real estate.

Construction Spending – The U.S. Census Bureau puts out a monthly report on construction spending activity, by dollar value, in the country. The report gives a breakdown by residential and nonresidential spending, as well as by private and public spending. It also provides the previous month’s activity and the previous year’s activity for the same month for comparison purposes. Another U.S. government report on new residential construction looks at residential construction activity nationwide through the number of permits issued and houses that builders started to work on. There is a regional breakdown of the activity, as well as figures for the previous month’s and year’s activity.

Home Sales – The National Association of Realtors provides a report on the number of used homes sold every month, as well as previous month and previous year input, for single-family houses, condos, and co-ops. This report, based on actual home sale closings, also provides input on inventory, prices, and regional sales performance. Various realtor groups in major states with significant housing activity—such as California, Florida, Illinois, and Texas—put out periodic reports on the sales activity and home prices in their respective states. These reports provide a more nuanced local-level market feel. A government report on new residential sales provides input on the number of new homes sold nationwide, based on sales contracts signed. It looks at the sales broken down by region and by various price points, such as sales under $150,000 and sales higher than $750,000. Also, it looks at the inventory of new houses for sale and the median and average prices of houses sold.

Pending Sales – Looking at the number of purchase contracts signed by buyers of existing homes, the National Association of Realtors produces a pending home sales index monthly report. This gives an idea about the level of sales closings to expect in upcoming periods. It also gives a regional breakdown of the pending sales activity and compares it to activity in the previous month and year.

NAHB’s Housing Market Index – The National Association of Home Builders (NAHB) puts out a monthly NAHB/Wells Fargo Housing Market Index that looks at the level of confidence that builders have in the single-family housing market. By taking a monthly survey of home builders, the NAHB gets input on how they feel about the current level of sales and buyer traffic, as well as their sales expectations for the upcoming six months. The index also provides regional input for the Northeast, Midwest, South, and West regions.

Price Indices – To get an idea about the level of home prices nationwide, which could provide a hint about buyer interest and general housing market optimism, there are also various price indices available. For instance, Standard & Poor’s puts out its S&P/Case-Shiller Home Price Index monthly. This looks at the national trend, as well as prices in certain metropolitan areas. There is also the Federal Housing Finance Agency’s House Price Index that uses input from Fannie Mae and Freddie Mac to track single-family home prices. And CoreLogic, Inc. has its own version of a home price index that looks at nationwide prices and also takes into account the impact of distressed sales.


  1. – U.S. Census Bureau
  2. – National Assoc. of Home Builders
  3. – Investopedia
  4. – National Assoc. of Realtors
  5. – Standard & Poor’s