By Michelle Dunlop Herald Writer
The Boeing Co. boosted its full-year outlook for the second time this year after quarterly profit topped analysts’ estimates following 27 percent growth in commercial jet deliveries and higher military aircraft sales.
Boeing’s net income rose to $967 million, or $1.27 a share, from $941 million, or $1.25, a year earlier, Boeing said July 25 in a statement. The average of 24 analysts’ estimates compiled by Bloomberg was $1.13.
The company’s shares were up as much as 3 percent in early trading that day.
Boeing officials remained upbeat about aircraft orders and deliveries, including for the 787 program, this year despite a “fragile” world economy.
“You got to keep in mind these airplanes … are replacement airplanes,” said Jim McNerney, Boeing’s CEO. The new airplanes offer better fuel efficiency, making them “a very quick payback investment” for carriers.
That strong demand for jets from airlines around the world prompted Boeing to raise its forecast for full-year profit to $4.40 to $4.60 a share from the April prediction of $4.15 to $4.35 a share. That’s down from $5.34 a share in 2011, as rising pension expenses, declining U.S. defense spending and lower margins on two new models eat into earnings.
Douglas Harned of Sanford C. Bernstein &Co. and other analysts had expected McNerney to lift the forecast, saying he has a history of conservative predictions at the beginning of the year. The average estimate in a Bloomberg survey of 27 analysts was $4.61 a share.
Boeing chief financial officer Greg Smith said the company will still meet its goal of delivering 35 to 42 Dreamliners this year even though the company handed over only 11 in the first half of 2012.
“I’d say we’re tracking pretty much to plan,” Smith said.
The company built more 787s in the second quarter than it delivered, due in part to troubles with Air India. That carrier has endured a pilots’ strike and is bogged down in bureaucracy over Dreamliner delivery delay compensation. India’s government has made some progress in clearing the way for its 787 deliveries.
Dreamliner deliveries will ramp up in August, Smith said. Boeing expects half of the remainder of 787 deliveries this year to come out of its Everett Modification Center, where workers are bringing early-run 787s up to certification standards, and half off the production lines in Everett and North Charleston, S.C.
McNerney described a recently discovered problem with 787 Rolls-Royce engines as “minor” and said it won’t affect the number of Dreamliners delivered this year.
Boeing is rapidly speeding production and deliveries of its new 787. The company still plans to be at a production rate of five 787s monthly at the end of 2012 and 10 787s monthly at the end of 2013.
McNerney did not provide new information on when Boeing will begin offering its highly anticipated larger version of the Dreamliner, the 787-10X, to customers. The company is expected to go to its board of directors in late 2012 or early 2013 for approval.
The 787-10X “looks like a pretty good airplane that will have a lot of market demand,” McNerney said.
Boeing has been booking orders for its new 737 Max, a redesigned version of its classic 737. Aeromexico announced a tentative order for 90 Max jets and 10 787s on July 25.
McNerney remains hopeful that the company also will land some new orders for its revamped 747-8. The company hasn’t added a firm order for the 747 yet this year and had just 84 unfilled requests at the end of June.
“I am not worried strategically at all,” McNerney said. “There are a couple (order) campaigns that we need to convert over the next six months.”
Defense revenue rose 7 percent, while revenue in the commercial airplane division jumped 34 percent. The divisions are roughly the same size, but some observers fear they will go in opposite directions.
Boeing’s defense unit is vulnerable to potentially severe military spending cuts in January. The cuts would be automatic unless Congress agrees to an alternative for cutting the deficit. The military would face $492 billion in cuts over a decade, with domestic spending reduced by an equal $492 billion over 10 years.
But it’s clear the unit is still holding strong. The second-quarter revenue growth is about the same as Boeing saw in the first three months of the year. Defense contractor Lockheed Martin had reported second-quarter results that surprised Wall Street earlier.
Bloomberg News and the Associated Press contributed to this report.
Michelle Dunlop: 425-339-3454; firstname.lastname@example.org.