Boeing raises 2012 earnings forecast

Herald staff and news services

The Boeing Co. boosted its full-year forecast for the third time this year after quarterly earnings topped estimates amid higher deliveries of commercial and military aircraft.

The planemaker said Wednesday that it now expects full-year profit of $4.80 to $4.95 a share. That compares with the $4.70 average estimate of 29 analysts in a Bloomberg survey. Chief Executive Officer Jim McNerney previously lifted his forecast by 25 cents to $4.40 to $4.60 a share in July.

Higher pension expenses have weighed on earnings this year. In addition, the 12 787 Dreamliners and eight 747-8s Boeing delivered were sold at lower margins than models such as the 777 and 737, as the company works to improve profitability on the new planes. Both entered service about a year ago.

787 and 747 progress

McNerney reiterated plans to deliver 35 to 42 787s in 2012. Through the first nine months, Boeing had handed over 23 Dreamliners. The company will have delivered five more so far in October by the end of Wednesday, McNerney said.

About half of Boeing’s 787 deliveries in the fourth quarter will be off the production line, said Greg Smith, Boeing’s chief financial officer. The other half will come from the change incorporation center in Everett, where workers are bringing some of the early-built 787s up to delivery standards.

“We’re seeing quality improvements across the board on the 787,” Smith said.

He estimates the unit cost on the 787 has dropped 50 percent from the first Dreamliner delivered in September 2011. Boeing was more than three years late delivering that jet due to problems with its global supply chain. The company estimates it will need to deliver 1,100 787s to break even on the program.

The company is on track to hit a production rate of 10 787s monthly by late 2013 between its Everett and North Charleston, S.C., final assembly lines, McNerney said.

Boeing officials also were optimistic that the company will meet its delivery goal of 35 to 42 aircraft on the 747-8. The company has delivered 21 jumbo jets so far in 2012, McNerney said.

Although securing new orders for the updated 747 have been a challenge for Boeing, McNerney expects orders for both the 747-8 passenger plane and freighter by year’s end.

As far as production slots for the 747, “we’re pretty much filled up for 2013,” he said.

Development programs

Boeing has won 858 firm orders for its 737 MAX program, McNerney said. Demand for the updated single-aisle aircraft remains high, he said.

The company also remains on schedule to deliver the first 787-9, a slightly larger version of the 787, in early 2014. Assembly of the first 787-9 is scheduled to begin next year.

Boeing is making “solid progress” on developing the KC-46A tanker for the U.S. Air Force, McNerney said. The aircraft is based on Boeing’s 767 commercial jet. Boeing’s plans to deliver 18 tankers to the Air Force by the end of 2017.

McNerney had little new to say on the 787-10X or 777X — both are planes yet to be launched by Boeing. The company is widely expected to begin offering the stretched version of the Dreamliner, dubbed the 787-10X, shortly.

As for an updated version of the Everett-built 777, McNerney noted the company has the option to add a composite wing and new engines to the hypothetical aircraft, called 777X. But he said Boeing is “a long way from making any decision on where we’re going to build” the composite wing. The composite wing of the 787 is built in Japan, not at Boeing’s Everett or North Charleston sites.

Financial results

Sales rose 13 percent to $20 billion, matching analysts’ projections. The Chicago-based company delivered 149 commercial jets and 50 military aircraft, helicopters and satellites in the quarter, representing a combined gain of 28 percent.

Net income fell 6 percent to $1.03 billion, or $1.35 a share, from $1.1 billion, or $1.46, a year earlier, the company said. The average of 25 analysts’ forecasts was for $1.12 a share. Today’s profit beat marks the 21st quarter in the seven years since McNerney took office that he has surpassed analysts’ projections.

Boeing rose 3.3 percent to $75.20 at 7:40 a.m., before the start of regular trading in New York. The shares previously fell less than 1 percent this year, trailing a 12 percent gain in the Standard &Poor’s 500 Index. Boeing stock was trading at $73.75, up 93 cents, around 9 a.m. Pacific Time.