Boeing’s earnings drop by one-half
Planemaker, airlines delay more deliveries
Boeing Co. said Wednesday its first-quarter profit dropped by half, hurt by production cuts as airlines postpone deliveries of new planes. It also forecast lower earnings for the year and reduced aircraft prices.
Demand for the Chicago-based company’s jetliners has tumbled as the recession continues to curb air travel and air cargo service. Airlines have grounded planes as fewer people fly, and tighter credit markets have made it more difficult for potential buyers to obtain financing for new aircraft.
Boeing, which makes passenger, freight and military jets, earned $610 million, or 86 cents per share, compared with $1.21 billion, or $1.62 per share, during the same period last year.
The results included a previously announced charge of 38 cents related to planned production cuts of its twin-aisle 777, plans to delay stepped-up production of its 747-8 and 767 planes and lower anticipated prices. Those lower prices reduced the value of planes in Boeing’s backlog.
Excluding one-time charges, profit reached 87 cents per share, below Wall Street expectations of 91 cents on revenue of $16.70 billion, according to a survey by Thomson Reuters.
Revenue edged up 3 percent to $16.50 billion.
During the quarter, Boeing delayed about 60 planes scheduled for delivery in 2010-11 at the request of customers.
“We are in the process of working on more,” Jim McNerney, Boeing’s chairman, president and chief executive, said during a conference call, without elaborating. “The deferrals are occurring across all regions and all models.”
Boeing has said it expects to fulfill deliveries scheduled for 2009.
J.B. Groh, an analyst at D.A. Davidson & Co., said investors were encouraged by Boeing’s statement that its 787 program remains on schedule, with the first test flight of the next-generation aircraft scheduled for the second quarter and deliveries slated to begin early next year.
Boeing also lowered its outlook less than expected, considering the previously announced charges, Groh said.
The company cut its 2009 profit forecast to a range of $4.70 to $5 per share, from $5.05 to $5.35, reflecting lower earnings at its commercial airplane business.
Shares of Boeing climbed 65 cents, or 1.8 percent, to close at $37.30 Wednesday. During the quarter, the stock slid nearly 17 percent, briefly hitting its lowest point in about six years – $29.05 per share.