By Michelle Dunlop Herald Writer
EVERETT — Increased deliveries of commercial and military aircraft helped the Boeing Co. post better than expected third-quarter results, prompting company officials to boost its full-year forecast.
But rising pension costs and dwindling military sales could affect next year’s performance. CEO Jim McNerney also expressed concerns about increased competition and expectations from customers. He has reached out to executives of key Boeing partners as part of a broader effort to cut costs.
“We see only growing expectations,” McNerney said in an Oct. 24 conference call. Customers want aircraft with more capability and greater efficiency.
For 2012, though, Boeing has been meeting, if not exceeding, its goals, including deliveries of the fuel-efficient 787 Dreamliner. Boeing’s on track to deliver between 585 and 600 jets across its plane programs this year. The planemaker on Oct. 24 boosted its full-year profit estimate to between $4.80 and $4.95 per share, up from an estimate in July of $4.40 to $4.60.
787 and 747 progress
McNerney reiterated plans to deliver 35 to 42 787s in 2012. Through the first nine months, Boeing had delivered 23 Dreamliners. The company will have delivered five more so far in October by the end of Oct. 24, 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 earlier built 787s up to delivery standards.
“We’re seeing quality improvements across the board on the 787,” Smith said.
The company is on track to hit a production rate of 10 787s a month 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.
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, two 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.
Net income fell 6 percent to $1.03 billion, from $1.1 billion a year ago. The profit of $1.35 per share would have been higher by 18 cents per share if not for increased pension expenses. That was well above the $1.12 per share expected by analysts surveyed by FactSet.
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.
Higher pension expenses have weighed on earnings this year. The projected $3.5 billion in pension expense next year will be about $1 billion more than this year’s, the planemaker said.
The defense unit, source of more than 40 percent of total sales last year, is bracing for cuts in Pentagon spending, according to Boeing, which won’t forecast 2013 performance until January.
Boeing shares rose 3.3 percent to $75.20 before the start of regular trading but closed Oct. 24 at $72.71, down 11 cents.
Herald news services contributed to this report.