Like The Herald Business Journal on Facebook!
The Herald of Everett, Washington
Heraldnet.com

The top local business stories in your email

Contact Us:

Josh O'Connor
Publisher
Phone: 425-339-3007
joconnor@heraldnet.com

Jody Knoblich
General Sales Manager
Phone: 425-339-3445
Fax: 425-339-3049
jknoblich@heraldnet.com

Jim Davis
Editor
Phone: 425-339-3097
jdavis@heraldnet.com

Site address:
1800 41st Street, S-300,
Everett, WA 98203

Mailing address:
P.O. Box 930
Everett, WA 98206

HBJ RSS feeds

Boeing tops expectations with strong earnings

SHARE: facebook Twitter icon Linkedin icon Google+ icon Email icon |  PRINTER-FRIENDLY  |  COMMENTS
Herald staff and The Associated Press
Published: Wednesday, April 25, 2012, 7:34 a.m.
Airlines around the world are updating their fleets with new, more fuel-efficient planes, and that's good news for aircraft maker Boeing Co.
The Chicago company (BA) said Wednesday that first-quarter profit soared 58 percent, beating analysts' expectations, as sales at its commercial airplane division surged. Even the defense business grew, although much more slowly.
Boeing delivered 137 commercial airplanes in the quarter, winning bragging rights over European rival Airbus, which had 131 deliveries.
Boeing's backlog rose, partly on orders for a new, more fuel-efficient version of its venerable 737 jetliner. Chairman and CEO James McNerney said the company was focused on profitably boosting commercial airplane production and delivery rates.
McNerney said the company remains on track to increase production on its new 787 Dreamliner to 10 aircraft monthly by the end of 2013. Boeing opened a second Dreamliner assembly line in North Charleston, S.C. That facility will roll out the first Dreamliner built there Friday.
"Charleston looks very good," McNerney said.
Boeing's CEO said he recently visited the 787 lines in both North Charleston and Everett.
"I think the learning curve progress in both places is giving me more and more confidence" that Boeing is on track both to meet delivery goals and improve profitability on the program, he said.
Boeing's chief financial officer Greg Smith said costs are coming down significantly on the 787, which Boeing was about three years late in delivering. Smith estimates a 40 percent drop in unit cost between the first 787, delivered last September to All Nippon Airways, and the 60th, which will roll out this summer.
Boeing doesn't anticipate a significant effect on 787 production or on production of other aircraft due to recent problems at supplier Spirit AeroSystems. Spirit's Wichita, Kan., site suffered tornado damage and was shut down for a week.
McNerney called the impact from Spirit "manageable."
Boeing also is increasing production on its updated 747-8, built in Everett. The company delivered the first 747-8 passenger plane to a VIP customer last quarter.
Germany's Lufthansa should receive its first 747-8 passenger plane today “if everything goes as planned,” McNerney said.
The company's stock price rose $3.19, or 4.4 percent, to $76.40 in morning trading. Before Wednesday, shares had been flat in 2012.
Boeing earned $923 million, or $1.22 per share, in the first quarter, compared with $586 million, or 78 cents per share, a year earlier. Excluding a gain from settling litigation, the company earned $1.11 per share, beating analysts' expectations of 96 cents.
Revenue rose 30 percent, to $19.4 billion, topping analysts' forecast of $18.5 billion.
The gains were driven by strength in sales of commercial airplanes, which trumped slow growth in the defense business. Boeing's 137 deliveries compared with 104 commercial planes delivered in the first quarter last year.
The company's commercial-plane backlog increased to $308 billion and had more than 300 orders for the 737 Max jetliner, which is expected to be ready in a few years to compete with the A320neo being developed by European rival Airbus. Both are single-aisle planes designed for short and medium-length flights.
Boeing has won 451 firm orders for the 737 MAX since the aircraft was launched last August, McNerney said.
In all, Boeing said it now has orders to build more than 4,000 commercial planes. The company did not comment on recent reports that it may be close to winning a big order from United Airlines. United has declined to comment.
Maxim Group LLC analyst Ray Neidl said the increase in deliveries showed that Boeing "is beginning to ring the cash register on its solid order placement." He predicted that orders will continue to rise for both small and large commercial jetliners.
First-quarter revenue from commercial planes jumped 54 percent, to $10.94 billion, while revenue from defense and space work grew just 8 percent, to $8.23 billion, reflecting tighter government budgets. The backlog of military planes grew 20 percent to $72 billion on orders for F-15 fighter jets and C-17 cargo planes.
Boeing raised its profit forecast for 2012 because it expects to set aside less money for litigation. The company predicted it will earn between $4.15 and $4.35 a share this year, up from a January forecast of $4.05 to $4.25. The new figure is still below the $4.48 per share that analysts expect.
Citigroup analyst Jason Gursky said Boeing was being conservative by not raising its 2012 forecast more. He said the company was probably holding back because of recent tornado damage at a supplier in Wichita, Kan., and questions about how quickly it can increase production of its new, large 787 jetliner, which fell far behind schedule.

MORE HBJ HEADLINES

CALENDAR

Share your comments: Log in using your HeraldNet account or your Facebook, Twitter or Disqus profile. Comments that violate the rules are subject to removal. Please see our terms of use. Please note that you must verify your email address for your comments to appear.

You are logged in using your HeraldNet ID. Click here to update your profile. | Log out.

Our new comment system is not supported in IE 7. Please upgrade your browser here.

comments powered by Disqus

Market roundup