November 28, 2020

Improved Sales Help Boeing Beat Forecasts

Boeing on Wednesday exceeded profit expectations for the second quarter as a result of more plane sales, a development that helped it raise its 2011 earnings guidance.

The company said it remained on track to deliver its first 787 Dreamliner passenger jet and 747-8 air freighter in the third quarter.

But Boeing, based in Chicago, also narrowed its delivery forecast for the new models. It now expects to deliver a total of 25 to 30 of them this year, compared with its previous expectation of 25 to 40.

Still, that projection was trimmed less than many analysts had anticipated. And the increase in plane deliveries in the second quarter helped drive a rebound in that part of Boeing’s business, which had slipped behind its military work in total revenue and profit.

W. James McNerney Jr., Boeing’s chief executive, told analysts that the company’s decision to install new engines on its single-aisle 737 jets, rather than build a new version of the plane, evolved over the last two to three months.

The decision was unveiled in an unusual fashion last week, when American Airlines announced that it would split a $38 billion plane order between Boeing, its longtime supplier, and Airbus, Boeing’s European rival.

Airbus announced several months ago that it would redesign its A320 models to accommodate more fuel-efficient engines. Boeing executives had said publicly that they were leaning toward building a new plane by 2020.

But Mr. McNerney told the analysts on Wednesday that two things had changed in Boeing’s calculations.

With Airbus quickly picking up orders for the plane with new engines, American and other airlines made it clear to Boeing that they would rather have “greater certainty in the midterm” on fuel savings than wait for “the more perfect solution,” Mr. McNerney said.

He said that Boeing’s studies also showed that it would be riskier than previously expected to set up a production system for an entirely new plane, especially given that production rates have been surging for the single-aisle jets.

Mr. McNerney said that Boeing believed that new engines would yield 10 to 12 percent in fuel savings on the 737s. Boeing officials said the changes could enable the 737 to retain what Boeing claims is an 8 percent advantage in total operating costs over the A320, even after that plane has new engines as well.

Boeing has announced plans to expand 737 production to 42 planes a year by 2014. Mr. McNerney said that the order backlog was so substantial that Boeing was likely to increase that to 50 or 60 planes by the end of the decade.

Boeing reported that its earnings increased 20 percent to $941 million, or $1.25 a share, from $787 million, or $1.06 a share, in the year-ago quarter. Revenue rose 6 percent to $16.5 billion from $15.6 billion. Analysts had expected Boeing to earn 97 cents a share.

The company raised its earnings forecast for all of 2011 to $3.90 to $4.10 a share. Its earlier forecast was $3.80 to $4 a share.

The company’s stock rose 47 cents to $70.63, on a day when the overall market was down sharply.

Article source: http://feeds.nytimes.com/click.phdo?i=bb2d0baf0fe2e3de43b66e8732eaede3

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