The executive, W. James McNerney Jr., said government investigators were making good progress in narrowing the possible causes of a recent battery fire on one 787 and a smoking battery that forced another plane to make an emergency landing in Japan.
In a conference call to discuss the company’s financial performance, Mr. McNerney also said that reports of airlines replacing some of the batteries in the months before those incidents were related to maintenance and not safety concerns.
All Nippon Airways, which operates 17 of the new jets, replaced 10 batteries between May and December, raising questions about reliability, The New York Times reported on Wednesday.
Mr. McNerney acknowledged that the batteries had been replaced at a “slightly higher” rate than the company had expected. But, he added, “What we know is that the replacement cycle that we’ve been experiencing there has been for maintenance reasons. There is no incident where we’re aware of where a battery has been replaced due to any kind of safety concerns.”
Other Boeing officials said a maintenance reason could be faster-than-expected aging, or errors by mechanics, as opposed to a flaw that could start a fire.
Mr. McNerney said he would not speculate on how long it would take to address the safety issues and how much that would cost the company. Aviation analysts have said a financial worst case could involve Boeing switching back to older and less volatile battery technologies, like nickel-cadmium, to restore confidence among air travelers.
But Mr. McNerney said, “Nothing we’ve learned has told us that we made the wrong choice on the battery technology.” He added a moment later that none of the investigative findings “causes us to question that decision at this stage.”
Investigators for the National Transportation Safety Board and their Japanese counterparts have said they have not found anything that could explain the fire and the smoke incidents on the planes.
Mr. McNerney made his comments shortly after Boeing reported a fourth-quarter profit that topped analysts’ estimates. The company also said it was not projecting at this point that the battery problems would have a significant impact on its earnings in 2013, though that could change depending on what the investigations found.
Mr. McNerney said in a statement released with the earnings that fixing the battery problems was the company’s “first order of business for 2013.” And even though all 50 of the 787s delivered so far have been grounded and Boeing has temporarily halted deliveries, Boeing said it still planned to deliver 60 of the planes this year.
Rob Stallard, an analyst with RBC Capital Markets, said in a note to investors that the company’s forecast of Dreamliner deliveries was lower than the 93 he had expected.
Mr. McNerney said in the call with analysts that two other factors would keep the deliveries from rising more rapidly. One is that Boeing is still reworking parts on some of the earliest planes it produced, when it was having problems with suppliers, and it will focus this year on finishing a subset of those that require the most work. He said the company also would begin building a second, larger version of the 787 this year, and integrating that model into the production lines could slow deliveries.
The Chicago-based company said its net income was $978 million, or $1.28 a share, in the fourth quarter, or 9 cents a share higher than the average estimate from analysts. Still, the net income dropped 30 percent, from $1.39 billion, or $1.84 a share, a year earlier, when a favorable tax settlement bolstered the company’s earnings.
Boeing said its revenue rose 14 percent in the fourth quarter, to $22.3 billion, from $19.55 billion a year earlier.
For all of 2012, Boeing earned $3.9 billion, or $5.11 a share, on revenue of $81.7 billion. It forecast that revenue would rise to $82 billion to $85 billion in 2013 and its net earnings would be in the range of $5 to $5.20 a share.
The company also reported that it had $13.5 billion in cash on hand at the end of 2012, leaving it in strong financial shape to weather any further problems with the batteries.
The lithium-ion batteries are more powerful than older types but also more volatile, and the 787 is the first plane in which Boeing has used them. The planes are the most technologically advanced jets on the market, with lightweight carbon composite structures and new engines that combine to reduce fuel consumption by 20 percent from older planes.
Investigators have said it remains possible that the failures that caused the incidents involving fire and smoke stemmed from flaws in the manufacturing process that could be corrected.
Boeing passed Airbus in 2012 to retake the worldwide lead in aircraft deliveries, a title it had lost in 2003, and said it expected to deliver a total of 635 to 645 planes in 2013.
Mr. McNerney said it was likely to use the new composite technologies to update its larger 777 jets and seek to maintain that advantage over Airbus.
All Nippon Airways said it replaced the 10 batteries last year after a variety of failures that led them to quit working. Boeing officials said some of the batteries might have needed replacing because built-in safeguards had activated to prevent overheating and to keep the drained batteries from being recharged in a risky manner. Boeing also said that if mechanics improperly connected a battery, another safeguard would also render the battery unusable.
Article source: http://www.nytimes.com/2013/01/31/business/boeing-earnings-exceed-estimates.html?partner=rss&emc=rss