Boeing profit of $586 million beats expectations

AP News
Posted: Apr 27, 2011 4:32 PM
Boeing profit of $586 million beats expectations

Boeing Co. posted a bigger-than-expected profit on Wednesday and said it is on track to deliver the much-delayed 787 in the third quarter.

Nearly 95 percent of the flight tests have been done on the version equipped with Rolls-Royce engines, and almost 75 percent on the version with General Electric engines, the company said.

The first delivery is three years behind schedule. The company has orders for 835 of the planes.

Boeing is building two 787s per month now, and will be making 2.5 per month later this year. It's aiming to get to 10 per month by the end of 2013.

A mix of Boeing facilities and suppliers make the 787 in sections, which Boeing then assembles. Building the planes at a faster rate will be "a significant challenge," said Jim McNerney, Boeing's chairman, president, and CEO. It will happen if the assemblies arrive at Boeing factories in better condition, "and that looks like it is on track. That's the key," he said.

With the first delivery apparently on schedule, Barclays Capital analyst Joseph F. Campbell Jr. said he believes executives are turning their attention to speeding up production.

"In order to get this plane to quit losing money, they can't build two a month. They need to move in the direction of 10 or 12 or 14," he said.

The 787s that have already been built are being reworked at a Boeing facility in San Antonio, Texas, to fix problems that started with suppliers and to make changes or improvements in response to flight tests, McNerney said. Most of the work required is on earlier planes, as opposed to those built more recently, he said. Work in San Antonio will need to continue well into next year, he said.

Boeing also said it still expects to deliver the freighter version of its new 747-8 in mid-2011.

McNerney said that the hole that tore open on a Southwest Airlines flight of a Boeing 737 might have resulted from a "workmanship issue" on that single plane, rather than a problem affecting multiple 737s. Federal investigators found problems with riveting work done when the plane was built 15 years ago. The National Transportation Safety Board said in a preliminary report this week that holes drilled in the plane's skin were too big for the rivets and did not line up properly.

Boeing's net income for the first quarter was $586 million, or 78 cents per share. Analysts surveyed by FactSet had been expecting a profit of 70 cents per share.

A year ago Boeing earned $519 million, or 70 cents per share, but that quarter's results were hurt by a one-time charge of 20 cents per share.

Operating profits fell by 15 percent. And revenue fell 2 percent to $14.91 billion, below the analyst expectation of $15.27 billion.

Earnings from operations in the commercial airplane unit dropped 25 percent to $509 million. Revenue fell 5 percent to $7.12 billion as Boeing delivered fewer 777s than a year earlier. Later this year Boeing plans to raise 777 production to 7 per month, from 5 per month now.

Defense revenue was flat at $7.62 billion. Earnings from operations rose 1 percent to $671 million, mostly from a jump in profits from military planes.

Boeing said its profit and revenue expectations for the full year are unchanged, with a profit of $3.80 to $4 per share and revenue of $68 billion to $71 billion.

Boeing shares rose 61 cents to close at $76.16.