Like The Herald Business Journal on Facebook!
The Herald of Everett, Washington
Customer service  |  Subscribe   |   Log in or sign up   |   Advertising information   |   Contact us

The top local business stories in your email

Contact Us:

Josh O'Connor
Phone: 425-339-3007

Maureen Bozlinski
General Sales Manager
Phone: 425-339-3445
Fax: 425-339-3049

Jim Davis
Phone: 425-339-3097

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

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

HBJ RSS feeds

Despite 787, Boeing 1Q earnings beat street

SHARE: facebook Twitter icon Linkedin icon Google+ icon Email icon |  PRINTER-FRIENDLY  |  COMMENTS
By Michelle Dunlop
Herald Writer
The Boeing Co. is bullishly pushing ahead with 787 production and other programs, executives said Wednesday while reporting improved first-quarter earnings.
Boeing shares hit a 52-week high Wednesday morning after the company reported earnings of $1.73 per share, or $1.87 billion, for the first quarter of 2013. That beat analyst estimates of $1.49 per share and topped first-quarter performance in 2012 of $1.40 per share.
Boeing shares closed at $90.83, up $2.65, for the day.
The company's improved results came despite the grounding of 787s by federal regulators due to battery failures. The Federal Aviation Administration signed off on plan Friday to return the jet to service once updated battery systems are installed.
"Thus far we have started installation on 10 fleet aircraft and 9 production airplanes," Jim McNerney, Boeing CEO, told analysts and journalists on an earnings call Wednesday. "We expect to complete the bulk of fleet retrofits by mid-May."
Although Boeing has been working to return the 787-8 to passenger service, it also has pressed forward with production increases. Boeing has begun the process of increasing output to seven 787s monthly between Everett and North Charleston, S.C., McNerney said. The Chicago-based jet maker remains on track to reach a pace of 10 787s by the end of 2013.
"And despite the three-month delivery suspension, our forecast remains to deliver greater than 60 787s during 2013," McNerney said.
Greg Smith, Boeing chief financial officer, indicated Boeing should reach its break-even point on the 787 "about two years from now." "The per-plane cost has dropped 60 percent from the eighth jet to No. 100 on the assembly line," he said.
Boeing has wrapped up engineering work on the next Dreamliner, the longer 787-9. Assembly of the first aircraft will being mid-year in Everett, with first flight in the latter half of 2013. The company plans to deliver the first 787-9 early next year.
The company also could launch two aircraft derivatives this year: the 787-10 and 777X.
McNerney anticipates launching the larger version of the Dreamliner, the 787-10, "sooner rather than later." He indicated Boeing still is working out how that version of the Dreamliner would fit into the 787 production schedule. Due to high demand and initial delivery delays, Boeing already is sold out on delivery spots for several years, leading analysts to question whether Boeing will have to build at a higher rate than 10 787s monthly to add in the new Dreamliner.
"The one thing we don't lack for with this airplane is demand," McNerney said. "Customers want us to launch this airplane." McNerney said it wouldn't "be a shock" if Boeing also begins offering an updated 777, dubbed the 777X for now, to customers by the end of 2013. The CEO confirmed the new 777 will have a composite wing and more efficient engines.
McNerney didn't indicate where that jet will be built. Boeing builds the existing 777 in Everett, which McNerney called an "attractive" consideration for 777X.
Boeing's rosy outlook didn't sway all analysts.
"Cash flow in the quarter was weak," Robert Stallard, an RBC Capital Markets analyst, with a neutral rating on the stock, said in a note to clients. "This should improve as the 787 starts to ship again."
Operating cash flow tumbled 37 percent to $524 million, hurt by the inventory buildup of Dreamliners as production continued during the worldwide grounding ordered by regulators to fix faults in the plane's lithium-ion batteries.
Revenue at the commercial airplane unit fell 2.3 percent to $10.7 billion while earnings from operations rose 13 percent to $1.22 billion. Defense revenue slid 1.5 percent to $8.11 billion on lower sales of military aircraft and global services and support. Operating earnings in that business climbed 12 percent to $832 million.
Bloomberg News contributed to this report. Michelle Dunlop: 425-339-3454;
Story tags » AerospaceBoeing



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