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Thu, Jan 27, 2011

Boeing Still Convinced 787 Will Show A Profit

Company May Still Revamp the 737

Boeing said it plans to deliver somewhere between 25 and 40 of its long-delayed Dreamliners this year, and said the airplane would be profitable despite the challenges getting to market. The remarks came as the company on Wednesday reported fourth-quarter net income of $1.2 billion, or $1.56 per share, on revenue of $16.6 billion.  Boeing says the results reflect solid performance across the company's core programs, a favorable tax settlement, and a special one-time contribution to Boeing's charitable trust. 

"Boeing delivered strong operating performance and exceptional cash generation from core production and services businesses in 2010, which helped mitigate the impact of development program challenges," said Jim McNerney, Boeing chairman, president and chief executive officer.  "We're entering 2011 well-positioned for growth, with a large order book, increasing global demand for commercial airplanes, greater clarity around our domestic defense outlook, and significant international defense sales opportunities.  Our focus for the year is to deliver the 787 and 747-8; manage disciplined increases in commercial airplane production rates and drive improved competitiveness and financial performance throughout the business."

Boeing's quarterly operating cash flow was $1.1 billion, reflecting strong operating performance while continuing to invest in development programs. Total company backlog at year-end was $321 billion, unchanged from the prior quarter and up 2 percent from the prior year.

Boeing Commercial Airplanes fourth-quarter revenue decreased by 11 percent to $8.2 billion on lower expected 777 and 747 airplane deliveries. For the full year, revenue decreased by 7 percent to $31.8 billion on the lower expected 777 and 747 airplane deliveries. Commercial Airplanes booked 180 gross orders during the quarter while 22 orders were removed from its order book.  This contrasts with the year-ago period when net orders were 62 airplanes.  For the full year, net orders were 530 airplanes.  Contractual backlog remains strong with 3,443 airplanes valued at $256 billion. 

The 787 program experienced an in-flight electrical incident on a test flight in November. As disclosed last week, first delivery is now expected in the third quarter of 2011 and includes the time required to produce, install and test updated software and new electrical power distribution panels in the flight test and production airplanes. Total firm orders for the 787 at year-end were 847 airplanes from 57 customers. 

Flight testing of the 747-8 Freighter progressed during the quarter, and the first two Intercontinental passenger models had electrical power successfully turned on.  Delivery of the first 747-8 Freighter is planned for mid-2011.

Boeing Defense, Space & Security's fourth-quarter revenue declined 4 percent to $8.2 billion on lower revenue in Boeing Military Aircraft (BMA) and Global Services & Support (GS&S). For the full year, revenue decreased by 5 percent to $31.9 billion on expected lower volume in N&SS.

The Dow Jones Newswire reports that McNereny also said that the company is still not committed to replacing, rather than revamping, the workhorse 737 airliner, but that the company was "leaning" in that direction. Airbus went the other way, offering the option of new engines and other changes on its A320s already in production.

The 787 is now not expected to be delivered until the third quarter of this year ... its seventh delay which has pushed the program three years behind schedule.

FMI: www.boeing.com

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