By BRYAN CORLISS
Herald Writer
SEATTLE — Improved performance on the production line led to a 28 percent improvement in the bottom line during the recently concluded third quarter, Boeing officials said Wednesday.
"This high-performance quarter underscores the remarkable transformation of our company and, in particular, the outstanding turnaround of our commercial airplane business," said Phil Condit, chairman and chief executive officer.
Boeing was derided as the "dog of the Dow" after production problems led to a $1.2 billion loss in the last two quarters of 1997.
On Wednesday, however, Boeing announced net earnings of $609 million for the third quarter of 2000, up from a profit of $477 million during the same period last year.
The increase came even though revenue was down about 10 percent compared with last year, falling from $13.3 billion to $11.9 billion.
The performance exceeded expectations of Wall Street analysts. The consensus among Boeing stock watchers was that the company would earn about 67 cents a share. Instead, it earned 72 cents a share, adjusted for one-time expenses.
Last year, Boeing earned 56 cents a share during the third quarter.
A strong order backlog means commercial aircraft production should remain steady through 2001 and into 2002, Condit told stock analysts and reporters.
And Condit said he still expects the company will launch its proposed 747X series of superjumbo planes sometime in early- to mid-2001.
For the quarter, profits in the key Commercial Airplane Group soared. Boeing made $739 million on sales of its jetliners during the quarter, compared with $534 million in the same quarter last year. The profit margin jumped to 9.9 percent, up from 6.2 percent in the comparable period in 1999.
"It’s about performance," Condit said. "I have to tell you, I’m pleased with our team’s performance."
It comes down to "blocking and tackling" on the assembly line, Chief Financial Officer Mike Sears said. Work that’s "planned to be done in Station One is being done in Station One."
And that means reduced time and costs, he explained, because it sharply reduces the need to go back and fix or reinstall parts as the plane moves down the assembly line.
As an example, Condit said, it used to take about 30,000 worker hours to assemble a 737. Now it takes less than 10,000 worker hours.
Boeing revised its year-end revenue projections up to $51 billion, and increased projections for 2001 from $53 billion to $57 billion.
The company has an order backlog big enough to result in the production of about 530 planes in both 2000 and 2001, Condit said.
Boeing won’t get back to record levels of 620 deliveries a year — and doesn’t want to, Condit said. His preference is "incremental growth instead of lots of peaks and valleys."
The biggest increase in orders is for 737s, Condit told analysts. "We’re seeing great strength in the smaller-sized planes," he said. "That’s exactly where we see the market is headed."
Yet Condit said he still expects the company will get its first orders for its superjumbo 747X family of jets early next year.
Boeing has yet to land a launch customer. Rival Airbus Industrie, meanwhile, has lined up orders for 32 of its proposed new 550-seat A3XXs, a plane designed to end Boeing’s lock on the market for jumbo jets.
But Boeing will not go ahead with the new X series planes — including a 520-seat 747X stretch version — if there is no demand for them, Condit said. "We’re not going to go spend money on a market that isn’t there."
For employees, Wednesday’s report is good news, Boeing spokesman Larry McCracken said.
"It means everybody’s performing in an outstanding manner," he said. "It was the performance in the commercial group that contributed, to a significant amount, to the success of the bottom line."
The news helped Boeing stock hold its own on a day when stock markets took a beating. The closing price was $60.75 a share, up 25 cents.
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