Despite Economic Woes, 787 Delays... Boeing Continues To Make Money

Even as most of its domestic airline customers continue to bleed red ink, on Wednesday Boeing posted a 43-percent increase to its first quarter earnings for 2008. Net income rose 38 percent to $1.2 billion, according to the American planemaker, and operating margin rose to 11.3 percent.

Boeing attributed its performance to "solid overall execution in both its commercial airplane and defense businesses as well as lower unallocated costs."

"We’re off to a good start in what we expect to be another strong year of financial performance for Boeing," said Chairman, President and Chief Executive Officer Jim McNerney. "We are methodically working through our challenges, including the start-up of the 787, and our people remain focused on satisfying our customers and leveraging growth and productivity into better bottom-line and top-line performance for our company."

Boeing’s quarterly revenue rose 4 percent to $16.0 billion while its operating cash flow more than doubled to $1.9 billion reflecting the strong operating earnings and higher commercial airplane orders -- enough for Boeing to reaffirm its earlier 2008 earnings per share predictions of between $5.70 and $5.85. For 2009, the company expects EPS returns from between $6.80 and $7.00.

On the airline side, Boeing Commercial Airplanes (BCA) first-quarter revenues rose to $8.2 billion on an 8 percent increase in airplane deliveries and higher services volume, partially offset by lower aircraft trading volume (Table 4). Operating earnings grew 39 percent to $983 million while margins expanded to 12.0 percent, driven by higher delivery volume and services sales and lower R&D spending. During the quarter, the company delivered its 1,400th 747 airplane and its 700th 777 airplane.

BCA booked 289 gross orders during the quarter, with contractual backlog rising to a record $271 billion, increasing to more than seven times BCA’s expected 2008 revenues. The company expects to deliver between 475 and 480 aircraft in 2008, with those numbers rising to as many as 505 in 2009.

Despite reports of further delays to its troubled 787 Dreamliner program, Boeing also reaffirmed progress on the composite-bodied airliner continues on the revised schedule announced earlier this month. Boeing says it continues to address slower-than-expected completion of work that traveled from supplier facilities into Boeing’s final assembly line and unanticipated rework.

As ANN reported, the company expects the first flight to occur in the fourth quarter of 2008 with first deliveries to begin in the third quarter of 2009. Despite the problems, the 787 is not lacking for orders -- with Boeing recording another 75 Dreamliner orders in the first quarter, bringing total firm orders to date to 892.

Over on the defense side, Boeing Integrated Defense Systems (IDS) expanded operating margins by 120 basis points to 11.4 percent on revenues of $7.6 billion.

FMI: www.boeing.com