When Boeing Co. executives discuss quarterly earnings with financial analysts on Wednesday, they likely will try to allay concerns about the 777 and 787 airplane programs.
The 777 has long been a huge cash generator for Boeing. The profits from that program have helped the Chicago-based company carry losses on its 787 Dreamliner program.
Boeing has made gains in recent months on cutting the cost of making a 787, but it is still losing money on each Dreamliner it sells. At last check, the amount was about $25 million per plane.
It delivered 37 787s — 28 from Everett and 9 from South Carolina — during the third quarter of the year. In all, the company delivered 199 aircraft.
So far, Boeing has had enough cash coming in from other sources to cover its Dreamliner costs.
The company spreads the losses out over the projected life of the airplane program, calling them deferred production costs.
Even as Boeing gets better at building Dreamliners, analysts expect deferred production costs to rise. Some are starting to wonder if the Boeing will ever make money off the 787 Dreamliner.
“If Boeing has not made progress on the cash loss/plane (with 37 787s delivered in 3Q), then investors could again be disappointed,” RBC Capital Markets analyst Rob Stallard said in a research note sent out on Tuesday.
Boeing shares dropped briefly last week thanks to comments from the Delta Airlines CEO, who sparked concerns that 777 prices are dropping. Boeing is already working hard to sell the mini-jumbo, which is being succeeded by the 777X. A fall in the price of older 777s — as leased aircraft or secondhand sales — would hurt sales of new 777s.
“We believe Delta’s comments were also somewhat self-serving,” said Ken Herbert, an analyst with Canaccord Genuity, in a research note last week.
Delta might have been trying to stoke market concerns in hopes of 777 leasing prices falling further, he said.
Virgin Atlantic has delayed announcing orders for about 20 777s in hopes that the airplane’s price will come down more, he said.
Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com; Twitter: @dcatchpole.
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