Boeing’s fourth quarter profit up, 2010 outlook cautious

The Boeing Co. beat analysts’ estimates for fourth quarter 2009 profit, but the company predicted a more cautious performance for 2010 than expected.

Boeing reported a net income of $1.27 billion, or $1.75 per share, for the fourth quarter of 2009. That beat Wall Street’s expectations of $1.36 per share.

On Wednesday, Boeing forecast earnings of $3.70 to $4 per share for 2010, given a previously disclosed plan to cut its 777 jet production. Analysts had expected an outlook of $65.42 billion in earnings, or $4.26 per share.

“We put a strong finish on 2009 by getting the 787 in the air and generating solid core operating performance across the company,” said Jim McNerney, Boeing’s CEO.

McNerney said the company still plans to deliver the first of its 787 Dreamliner jets late this year. Boeing also expects to deliver “a few” of its new 747-8 jumbo jets this year. The first flight of the 747-8 will be in the “very near future,” McNerney said.

“We are achieving important milestones toward getting (the 787 and 747-8) into customer hands,” McNerney said.

Boeing shares skyrocketed in early morning trading, increasing nearly 5.5 percent by 9 a.m., Pacific Standard Time.

Boeing plans to deliver between 460 and 465 commercial airplanes in 2010, compared to 481 in 2009. The drop in deliveries is due to the planned reduction in 777 jet production.

Although observers speculated that Boeing may slash production rates on its Renton-built 737 aircraft, Boeing’s McNerney said the company will hold rates on its popular single-aisle jet.

For the full year of 2009, Boeing’s revenues rose to $68.3 billion, compared to $60.9 billion in 2008. However, the company’s earnings dropped to $1.84 per share, compared to $3.67 per share in 2008, due to a previously reported $3.58 charge for the company’s 747 and 787 commercial jet programs.

Boeing expects its revenues to rise in 2011 as the company begins deliver more 787s and 747-8s. Flight testing for the 787 has not revealed any major problems with the fuel-efficient airplane. The company expects to put the third and fourth flight test 787s in the air in February, McNerney said.

“So far, so good. We have not discovered anything significant,” he said.

Boeing’s airline customers weathered a rough 2009, experiencing a significant downturn in air traffic. As a result, Boeing accommodated 271 aircraft delivery deferrals last year but saw a decreasing number of requests for deferrals as the year went along, McNerney said. The company’s commercial airplanes backlog stands at $250 billion.

Although Boeing’s McNerney is encouraged by opportunities in commercial airplanes, he sees the company winning fewer requests for new airplanes in 2010 than the number of aircraft it will deliver this year.

Boeing’s positive fourth-quarter seems to have appeased Wall Street and industry analysts.

Although Morningstar analyst Brian Nelson believes much of the potential troubles for Boeing’s 787 and 747-8 are behind the company, the analyst noted the possibility of unknowns cropping up during flight testing. The analyst thinks first delivery of the 787 is more likely to take place in early 2011 rather than late 2010 as outlined by Boeing.

“Despite the lackluster guidance, we think Boeing looks to a much better 2010 on the operational front,” Nelson wrote in a note to investors.

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