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UPDATE 1-Boeing's new avionics group aims to cut costs, boost quality

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NEW YORK, July 31 (Reuters) - Boeing Co said on Monday it has set up an avionics group to make flight controls and other electronics currently made by outside suppliers for commercial and military aircraft, aiming to bring products to market after 2020.

The world's largest plane maker said the group has started developing systems that it expects will be lower cost, higher quality alternatives to existing products made by suppliers, and would deliver more services revenue to Boeing after a plane is sold.

Boeing has brought propulsion, carbon fiber and other capabilities in house in recent years, reversing outsourcing to suppliers last decade for the 787 Dreamliner that led to billions of dollars in cost overruns.

The new group aims to "further drive cost down and value up for our customers, in all phases of a product's life cycle," Boeing Chief Executive Dennis Muilenburg said in an internal statement to employees.

Boeing shares were up 1.3 percent at $244.40 in midday trading. (Reporting by Alwyn Scott; Editing by Meredith Mazzilli)